A Model Of Sustained Economic Growth

Economic growth is a common term used by economists to describe in increase in production in the long run. According to Robinson (1972) economic growth is defined as increases in aggregate product, either total or per capita, without reference to changes in the structure of the economy or in the social and cultural value systems. The basic tool of measuring the economic growth includes the real GDP. It provides some quantitative measures in terms of the production volume.

First of all, economic growth is one of the macroeconomic objectives that the government wants to achieve as a primary goal and it happens when there is a rise in the enlarged product of population and per capita consumption. According to Hoover (2011), economic growth is the total material output of good values and service values in the market, measured by Gross Domestic Product (GDP) in a specific period of time. The growth of GDP is measured by excluding intermediate consumptions (production and resale), purely financial transactions and second-hand sales, which prevents double counting. To obtain an accurate value of economic growth, GDP needs to include the total output of expenditures and incomes.

The Solow Model is designed to show how the growth in the labour force, capital stock and advances in technology interact and how they affect a nations total output. The model is important for the analysis of economic growth in developing countries as it demonstrates the nature of an economy to be a key determinant of steady-state capital stock within a country. If the savings rate is high, the economy will have a large capital stock and thus high level of output and vice versa. Correspondingly changes in capital stock can lead to economic growth.

As a product of colonization, the limited industrial development in the colonized area is a global issue. Because the widening gap between the rich and the poor between developing and developed countries, is the root reason of most of the contradictions and conflicts between countries in the contemporary world. And different level of industrialization caused the widening gap. So we can say the limited industrial development caused by colonialism is a real issue behind many current contradictions and conflicts. In order to reduce these conflicts and narrow the gap, the colonized countries should make a breakthrough on its limited industrialization by focusing on its own features-- resources and structures, and taking effective measures-- impoting foreign capital and technology and establishing independent or joint scientific research and ventures, to gain a long-term economic growth. For the relation between the colonization and the limited industrialization in colony, there are usually two views. One view is that people blame the colonizer were not willing to promote the development of industry in the colony. The other view is that people emphasize it was hard for the colonized to start the process of industrialization in the colony. In my opinion, both of the views are reasonable, but neither of them is comprehensive. In order to demonstrate my opinion on the relation, I choose British India and the Belgian Congo as two objects to analysis in the following paragraphs

Capital accumulation involves the rate at which investment in capital occurs, relative to its depreciation (Swan, 1956)- the rate at which an economy possesses productive human and physical resources available to create products and services. As GDP is a function of capital per effective worker, there is a clear relationship between capital and economic growth. (Appendix 1).

Krugman (1994) summarizes two sources of growth that help to expand the national economy. They are increasing input and increasing output per unit of input. Because of the diminishing return to capital, increasing input can only increase the output level in the long run. Therefore, increasing input, such as increasing employment opportunities, increasing the education level of workers, and increasing the stocks of physical capitals, is not sustainable in the long run. On the other hand, increasing the knowledge, which belongs to the increasing output per unit of input, increases the output growth rate in the long run. Krugman concludes that only technological progress can affect the growth rate of steady state in the long run.

Economic growth is defined as the expansion of the productive capacity of an economy. An increase in resources causes an area to produce more goods or services in a given period of time – as shown on a production possibility frontier (PPF) diagram, where the curve shifts outwards. The PPF is a curve showing the maximum combinations of goods and services that can be produced in a given period with available resources. The improvement in economic efficiency is shown on the diagram where the curve shifts from PPF1-PPF2, which could be as a result of an increase in the total stock of resources available.

Eyeballing any cross sectional data on growth across countries shows that countries grow at different rates. Many theories try to explain this phenomenon with emphasis with capital accumulation being one of them. I will start by developing the standard neoclassical growth model as developed by Solow(1956)[1]. I will then proceed to discuss the extensions that have been made to this basic model in an attempt to better understand actual growth figures, for e.g. the standard neoclassical model cannot explain the magnitude of international differences in growth rates. Mankiw[2] points out that “the model can explain

This can be measured by the following formula; Per capita nominal GDP = Nominal GDP / Population, Per capita real GDP = Real GDP / Population. Seven factors determine economic growth. Natural resources such as land, mineral deposits, waterways; climatic conditions provide an essential foundation to economic growth. Combined with the other resources of capital, labor and enterprises, natural resources can be developed and organized to increase the productive capacity if the nation. Consequently the quality and size of the labor force is a major determinant of economic growth. Education and vocational training are essential the growth potential of a nation. The promotion of education and job training schemes increase the knowledge, skills and flexibility of the workforce that contributes to potentially higher levels of productivity and efficiency. Whether from natural increase or immigration population growth can cause a higher level of economic growth. An increasing population requires increased public spending on housing, education and other social needs while businesses expectations of

Another factor influencing growth is the significance of international trade. In countries that don’t participate in international trade, such as , there is very slow or no economic growth. This is because it is very hard for one economy to produce all goods which people require. It is better to specialise in a few goods, use them, sell the

ABSTRACT The present paper examines the performance of Trends of Agriculture growth and production in India. And also The paper has shown the growth and production has significantly increased from during the last three decades and also highlight the performance of the Indian

Economic growth is conventionally measured by the increase of the Gross Domestic Product (GDP) (Khan, 2014; Pritzker, 2014; IMF, 2012). It is closely related to the increase of aggregated output (Broadberry, 2011, Hausmann and Hidalgo, 2011). Many scholars have interest in economic growth because it has potential both for reducing poverty (Ravallion, 2001; Goudie and Ladd, 1999), and raising people’s living standard (Dupont, 2015; Jackson, 2008).

Growth of the economy can be measured in several ways. One of the most common ways is by measuring the changes in GDP of the country. GDP (Gross Domestic Product) is the total value of goods and services produced in a country. As per Mankiw (2003), the long-run determinants of GDP are the factors of production, which are capital, labour and technology. The correlation is such that GDP grows when the factors of production increase or when the available technology improves.

The long history of ideas on economic growth started from the classical economists like Adam Smith, Robert Malthus, Ricardo and Marx. For more than three decades the Neoclassical and the Endogenous Growth theories were arguing and forwarding economic reasons on trend of economic growth through investment as a general and private investment in particular. Though there are various theories, as mentioned above, regarding economic growth, in this section we will address the most commonly applied models: the classical theory of economic growth, Harrod–domar Growth model, The Neoclassical and Endogenous Growth Models.

Villages comprise the base of Indian society and also represent the real India. It is for these villagers that we need to make sure we build a system that delivers basic social infrastructure in an effective manner. In order to ensure that the fruits of India 's progress are shared by all sections of the society, the government has identified several elements of social and economic infrastructure, critical to the quality of life in rural areas. Its rising middle class demands more than just bread. Food and agricultural operators based in India and abroad are responding to the country’s demands with an array of high-quality food products that contribute to India’s increasing nutritional requirements and add value to India’s agricultural supply chain. However even today there are disparities of development between the rural and the urban sector. In spite of planning, however, the regional disparity remained a serious problem in India. A new controversy in this respect is whether growth rates and standard of living in different regions would eventually converge or not. The convergence postulates that when the growth rate of an economy accelerates, initially some regions with better resources would grow faster than others. But after sometime, when the law of diminishing marginal returns set in, first growth rates would converge, due to differential marginal productivity of capital (higher in poorer regions and lower in