Economic Growth And Economic Development

1177 Words Jun 8th, 2016 5 Pages
Economic growth and Economic Development is of the highest priority in regards to a well-functioning sovereign state. Economic growth powers an economy through the stability ensured by equilibrium in the circular flow of money accompanied by: growing international competitiveness in a globalised market, increase in real GDP through the appropriate allocation of resources most suited to the expansion of the economy, increase in aggregate demand and increased efficiency in the economy. Stagnation or prolonged contraction of an economy, identified by the disequilibrium in the circular flow of money, with leakages exceeding injections, and a growing Current Account Deficit (CAD), can lead to a fall in aggregate demand, wages and employment. With this fall also comes a fall in the Quality of Life as the aggregate propensity to spend contracts and Government assistance is more widely needed to meet daily needs.
Economic development is defined by the Quality of life within a specific region. Quality of life can be measured through the Human Development Index (HDI). This HDI takes into account the life expectancy of a person, their ability to obtain and the quality of their education, and living standards within any particular country. Quality of Life is integral to the stability of an economy and nation state, as an economy cannot perpetually thrive at the expense of the populous. This is evident in the examples of revolution spurred by food shortages such as the French and Russian…
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