Improving The Standard Of Gross Domestic Product

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To keep the economy running smoothly, to maintain price stability and to alleviate poverty are the main goals for formulating policies around the world. The experiences of every country are various as different patterns of economic development. Although it is widely accepted that the reduction of poverty accompanies the economic growth of a country, which encourages many countries, especially some developing countries, to concentrate on improving the standard of gross domestic product (GDP), it is still controversial whether the causal relationship exists or not, for recent evidence shows that if the measures are not taken appropriately by the government, citizens may remain impoverished. This essay focuses on China and India, two of the…show more content…
Meanwhile, a similar situation is witnessed in China. In the past decades since 1990, the growth performance of the Chinese economy has been rising fast with an annual per capita growth rate of approximately 9%. During this period, living standards in China have improved significantly with rapid poverty reduction (Chen, 2007; Ravallion, 2008). To be more precise with statistics, from 1989 to 2004, income in Chinese inland provinces doubled (from 1149 yuan to 3537 yuan), while that in coastal provinces, more than tripled (from 982 yuan to 2338 yuan). This 15-year period has seen the more rapid growth in urban areas of both coastal and inland provinces. In rural areas, average household per capita income rose 2.5 times and in urban areas, it multiplied 3 times (Goh et al, 2008). However, some further researches indicate that economic growth and poverty reduction do not appear to be linked as is seen superficially. According to Donaldson’s research (2007), comparing four indicators (poverty rates, GDP, the rich–poor gap and the growth rates in GDP/capita) in many periods, the result suggests that their relationship is not significant. Besides, there is a nonsynchronous phase between the changes in poverty and economic growth rates during certain periods. For instance, during the years 1978 to 1984, rural poverty in China decreased rapidly, even as the pace of economic growth during much of this time was slowing, this implies that economic
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