Economic Development And Economic Growth

Aggregate demand is a schedule or curve that shows the total quantity of goods and services demanded at different price levels. Aggregate supply is a schedule or curve that shows the total quantity of goods and services produced at different price levels.

Income inequality has been a major concern around the world, and it mainly links to how economic metrics are distributed among individuals in a country. Economists generally categorise these metrics in wealth, income and consumption. Wilkinson and Picket (2009) showed in their studies that inequality has drawbacks that lead to social problems. This is because income inequality and wealth concentration can hinder or delay long term growth. In 2011, International Monetary Fund economists showed that less income inequality increased the duration of countries’ economic growth spells more than free trade, low government corruption, foreign investment or low foreign debt (Berg and Ostry, 2011).

A sound solution for income inequality is the creation of more jobs. It would decrease poverty significantly and increase the growth of the country. A better taxation system would encourage firm owners to stay and provide more jobs. The government also needs to exhibit proper fiscal handling, invest wisely and bring an end to corruption. Moreover, investment in infrastructure creates more job opportunities especially for the

Inequality has increased within the most advanced and emerging markets and developing countries (EMDCs), a phenomenon that has garnered considerable attention with President Obama calling widening income inequality the “defining challenge of our time.” Irrespective of culture, religion and ideology, inequality concerns and affects everyone. Inequality can serve as an indication of the shortage of income mobility and opportunity―a reflection of the perpetual disadvantage for certain sectors of society. Increasing inequality also has serious implications for macroeconomic stability and economic growth, it can concentrate political and decision making power in the hands of a few. This in turn results in the inefficient allocation of human resources,

Introduction: Impacts of income inequality affects the overall progress of economies in different ways. Economists have been focusing on to determine the relationship between the growing inequality and economic growth over the years. Chris Tilly is one of the researchers who has made an attempt to investigate this issue by analyzing several theories and providing examples. He is currently a professor in the Urban Planning Department at UCLA and a member of Dollar and Sense, popular economics journal, as well. His article: “Why inequality is bad for the economy: Geese, golden eggs and traps” published in Wealth Inequality Reader in 2004. According to Tilly, inequality has a negative outcome on the economy while equality is the trigger for growth.

This estimated data is used to show how impactful the changes in inequality can be, in result it is estimated to have knock off more than 4 percent points to growth in half of the countries over the two decades. The key factor that this data allows us to focus on is that: the gap between lower income households and the rest of population’s income distribution, is seen not only in the lowest level of income inequality but in the bottom four groupings of poorest income. The results suggest that policy might not be effective solely by addressing poverty but by addressing lower incomes as a whole. Typically, redistribution (taxes and benefits) has been the most direct policy tool in addressing reducing income inequality but the widening suggests

Inequality and its impact on economic growth, is broad state of affairs that has been investigated by researchers over the years. There are differing points of views on the importance and impact of inequality on economic growth. In his article Tilly argued the importance and negative impact of inequality on the economy, although sometimes over-passing some issues or overstating certain arguments that are not relevant for the topic, in a precise and simplified way . This review will emphasize the deficiencies in the arguments, evaluate the irrelevant statements and assess the flow of arguments and writing style in a critical manner.

Economic growth and inequality has been a long debated topic but is more important in the recent decades as income inequality has dramatically grown within many countries; the implications on these can hinder social and political development. Economic growth and its link to Equality can help create stability for an economy and improve living standards in the long run. More directly it allows people to be able to contribute and engage in the economy as it provides the opportunity for employment, investment and savings as well as consumption (Gehring & Kulkarni, 2006). These opportunities are channelled through the drivers of economic growth that increase factors of production (Human Capital, Technology and Institutions), as a result the relationship between growth and inequality are evident in the functioning of the labour market. Many of the theoretical and empirical studies that explore the relationship between inequality and growth have so far been disappointing and inconclusive. One of the reasons for this is the emergence of the different types of inequality that affect growth which is inequality of opportunity and effort, therefore the relationship can be positive or negative based on the type of inequality, so it’s important to explore the theory behind inequality of income, opportunity and intergenerational mobility as the answer to the question embedded in each (Bradbury & Triest, 2014).

Economic growth is a necessary but not sufficient condition of economic development. There is no single definition that encompasses all the aspects of economic development. The most comprehensive definition perhaps of economic development is the one given by Todaro: ‘Development is not purely an economic phenomenon but rather a multi – dimensional process involving reorganization and re orientation of the entire economic and social system. Development is a process of improving the quality of all human lives with three equally important aspects. These are: 1.

The global demographic trend has become a subject of discussion by researchers, policymakers, and the mass media. Economic performance in any country is, to a substantial degree, affected by the country’s demographic situation. In recent decades, the developed countries have been experiencing declining fertility rates that caused serious shortages of the workforce. Besides, the plunging fertility rates have led to the phenomenon called “ageing population” which has become a socio-economic reality in many developed countries and which has put a big strain on their pension systems. Furthermore, in 2014, there was a campaign tagged “Do it for Denmark” where Danes were encouraged to go for more babies to check the decreasing birth rates. On the other hand, the poor economic performance of especially developing economies is related to their demographic growth; therefore, funds are allocated for campaign against their population growth. The importance of the relationship between population growth and economic development has been well recognized by development economists. As Dawson and Tiffin (1998: 149) have pointed out, “most textbooks on economic development include a section on population and development”.

This research also shows that economic growth, on average, raises incomes for both the rich and the poor. It helps to lift the poorest in society out of absolute poverty and does not automatically increase inequality. More importantly, no country has managed to lift itself out of poverty without integrating into the global economy.

Since the great recession ended more than five years ago, we have never truly recovered and are still facing slow economic growth to this day. Despite even the best efforts of the US government to reverse the situation, with its nine figure bailouts and lowering interest rates to nearly zero. These measures were made, one to try and make the government and two to try and stimulate the government to increase investment spending. Instead of this desire effect of banks’ lending out money and business expanding their business, the opposite seems to be true with most banks and business holding onto their money instead. This is caused mainly by banks and business lack of faith in the state of the current economy and its potential for future growth. I believe if the US economy is going to get back on track to where it wants to be in needs to increase government spending that can improve the economy over the long term. My plan is to spend 250 billion in direct spending on new and improved infrastructure, to spend 25 billion on a private/public infrastructure bank. Lastly increase funding for scientific research at agencies like the National Institutes of Health and the National Science Foundation. Even though there will be some short term benefits the main goal here is to increase long term outlook for the economy.

Economic growth rate can be measured as an increase in the capacity of an economy to produce goods and services, compared from one period of time to another (Investopedia). Ylan Mui and Nelson Schwartz offer information on what is stagnating our nation’s economic growth. Many have been looking at the economic growth of the third quarter very disheartened. U.S. economic growth during the third quarter expanded at a 1.5% rate, which is considerably lower than the last quarter. There are many reason that the economy is experiencing this lackluster growth, and there are several terms necessary for understanding economic growth as it relates to the article. They will be introduced as we dissect the information presented.

More economically developed countries (MEDC) - Countries with sovereign states and that has a highly developed economy with advanced technological industries as compared to other countries. The Human Development index, standard of living as well as the Gross national product of these economies is on the upper level of every chart. According to the International Monetary Fund, advanced economies comprise 60.8% of global nominal GDP and 42.9% of global GDP (PPP) in 2014.

According to the report of the Commission on Growth and Development, persistent, determined focus on inclusive long-term growth by governments is one of the ingredients of a successful growth strategy. Yet, there is limited analytic work integrating the literature on growth and productive employment. 5 The term ‘shared growth’ can be misunderstood as implying a focus on income distribution schemes, which is why inclusive growth is preferred. 6 Source: Growing Unequal? Income Distribution and Poverty in OECD Countries, OECD (2008).