Explain the difference between economic growth and economic development

Economic Growth is a narrower concept than economic development.It is an increase in a country's real level of national output which can be caused by an increase in the quality of resources (by education etc.), increase in the quantity of resources & improvements in technology or in another way an increase in the value of goods and services produced by every sector of the economy. Economic Growth can be measured by an increase in a country's GDP (gross domestic product).

Explain the difference between economic growth and economic development

Economic development is a normative concept i.e. it applies in the context ofpeople's sense of morality (right and wrong, good and bad). The definition of economic development given by Michael Todaro is an increase in living standards, improvement in self-esteem needs and freedom from oppression as well as a greater choice. The most accurate method of measuring development is theHuman Development Index which takes into account the literacy rates & life expectancy which affect productivity and could lead to Economic Growth. It also leads to the creation of more opportunities in the sectors of education, healthcare, employment and the conservation of the environment.It implies an increase in the per capita income of every citizen.

Explain the difference between economic growth and economic development

Economic Growth does not take into account the size of the informal economy. The informal economy is also known as the black economy which is unrecorded economic activity. Development alleviates people from low standards of living into proper employment with suitable shelter. Economic Growth does not take into account the depletion of natural resources which might lead to pollution, congestion & disease. Development however is concerned with sustainability which means meeting the needs of the present without compromising future needs. These environmental effects are becoming more of a problem for Governments now that the pressure has increased on them due to Global warming. Economic growth is a necessary but not sufficient condition of economic development.

What can a government do to increase productivity in a country?

What is productivity?
The ratio of a specific measure of output to a specific measure of input When does productivity increase? When the units of output is more than the units of input What factors lead to an increase in productivity?
Inventions (more and better capital) growth in human capital Innovations

economies of scale
mobile labor force

What can a government do to increase productivity in a country?

What is human capital?
The accumulated knowledge, skill, and experience of the labor force What is innovation? A new way of doing something How does the specialization of labor increase productivity? Takes advantage of individual natural abilities Allows workers to develop more experience at a particular task Permits the introduction of labor-saving machinery Reduces time required to shift between tasks

What can a government do to increase productivity in a country?

What does the term economies of scale mean? A companies average costs decrease over the long run as the company grows, growth can be global (tax reduction by government, lower government regulations trade restrictions) What does the housing market have to do with a mobile labor force? Many people are upside down on their mortgages and cannot relocate very easily What does our growing national debt have to do with growth? The more we pay in interest the less we have to invest, especially when so much of the interest is paid to foreigners

What can a government do to increase productivity in a country?

What does monetizing the debt have to do with growth? Money creation leads to inflation and inflation distorts price signals, erodes buying power, and leads to more unemployment Vietnam has benefited from a program of internal restructuring, a transition from the agricultural base toward manufacturing and services, and a demographic dividend powered by a youthful population. The country has also prospered since joining the World Trade Organization, in 2007, normalizing trade relations with the United States and ensuring that the economy is consistently ranked as one of Asias most attractive destinations for foreign investors Vietnam should increase its labor productivity growth within sectors to achieve an economy-wide boost

What can a government do to reduce poverty in a country?

Reduce levels of corruption: if all the states resources are being diverted through corruption, there are no resources left to be used for basic infrastructure, or any social programs; Introduce education campaigns that inform citizens of their rights and teach them job skills so they do not have to rely on the state (where possible); Strengthen institutions such as parliaments so they can exercise their oversight roles more effectively; Encourage the media and civil society to expose corruption and educate the public and policy makers about the socioeconomic conditions of citizens; Strengthen labor unions to ensure worker rights and fair wages;

What can a government do to reduce poverty in a country?

Develop targeted poverty reduction programs, including conditional cash-transfer programs to low-income families of the kind being used in some Latin American states; Improve taxation policies to redistribute wealth more effectively and to generate revenue for social policy programs; Strengthen the rule of law to increase accountability and reduce corruption; And Enforce rules that discourage foreign investment in undemocratic countries and reward businesses that follow fair employment practices. See more at: http://www.wmd.org/assemblies/fifthassembly/reports/democracy-research-and-educationworkshops/what-can-democracies-do#sthash.TPQYHF2i.dpuf

Vietnam looks back to 20 years of strong economic growth. How can you explain this trend?
Vietnam has benefited from a program of internal restructuring, a transition from the agricultural base toward manufacturing and services, and a demographic dividend powered by a youthful population. The country has also prospered since joining the World Trade Organization, in 2007, normalizing trade relations with the United States and ensuring that the economy is consistently ranked as one of Asias most attractive destinations for foreign investors.

Vietnam looks back to 20 years of strong economic growth. How can you explain this trend?
The McKinsey Global Institute (MGI) estimates that an expanding labor pool and the structural shift away from agriculture contributed two-thirds of Vietnams 7 percent annual GDP growth from 2005 to 2010.1 The other third came from improving productivity within sectors. But the first two forces have less and less power to drive further expansion. According to official Vietnam statistics, growth in the countrys labor force will probably decline to about 0.6 percent a year over the next decade, down from 2.8 percent between 2000 and 2010. Given the past decades rapid rate of migration from farm to factory, it seems unlikely that the pace can accelerate further to raise productivity enough to offset the slowing growth of the labor force.

Vietnam looks back to 20 years of strong economic growth. How can you explain this trend? http://www.mckinsey.com/insights/asiapacific/sustaining_growth_in_vietnam

How does the lack of formal institutions hamper economic growth and development? What can individuals do to cope with this situation? Give 3 examples

Economic maturity and the growth of markets require an institutional framework that allows transactions to take place in an orderly manner and in which agents know that the decisions they take and the contracts they make will be protected by law, and enforced. Savers, investors, consumers, entrepreneurs, workers and risk-takers of all kinds need a framework of rules if rational, optimizing decisions are to be made. They also need some guarantee of economic stability and certainty, which can be provided only by good governance and sound economic policymaking. The alternative to a lack of property rights, law and order and political stability is economic anarchy and failed states

How does the lack of formal institutions hamper economic growth and development? What can individuals do to cope with this situation? Give 3 examples

D. North said that the inability of societies to develop effective low-cost enforcement of contracts is the most important source of both historical stagnation and contemporary underdevelopment in the Third World, because the absence of secure property and contractual rights discourages investment and specialization. Mancur Olson (1982) makes the same point in his classic book The Rise and Decline of Nations (1992)

How does the lack of formal institutions hamper economic growth and development? What can individuals do to cope with this situation? Give 3 examples

Rodrik (2000) highlights the following institutional arrangements that are conspicuously absent in poor countries: a clearly defined system of property rights a regulatory apparatus curbing the worst forms of fraud, anti-competitive behaviour and moral hazard a moderately cohesive society exhibiting trust and social cooperation social and political institutions that mitigate risk and manage social conflict the rule of law and clean government

How does the lack of formal institutions hamper economic growth and development? What can individuals do to cope with this situation? Give 3 examples
These five main prerequisites of a sound institutional structure for economic development are described briefly below. Property rights and legally binding contracts. These are important because agents lack the incentive to invest and innovate if they do not have control over the return on the assets they accumulate. Intellectual property rights are particularly important to encourage invention. Control is more important than ownership. Formal property rights do not mean very much if there are not control rights; but control rights can spur entrepreneurial activity without clearly defined property rights

How does the lack of formal institutions hamper economic growth and development? What can individuals do to cope with this situation? Give 3 examples These five main prerequisites of a sound institutional structure for economic development are described briefly below. Regulatory institutions. Markets fail if there is fraud or anticompetitive behavior. Regulatory institutions are needed if markets are to function properly. When markets are liberalized, a regulatory framework is also required to avoid the consequences of risky behavior, such as financial crises if the banking system is not properly regulated (as the world economy witnessed in 2008).

How does the lack of formal institutions hamper economic growth and development? What can individuals do to cope with this situation? Give 3 examples These five main prerequisites of a sound institutional structure for economic development are described briefly below. Institutions for macroeconomic stability. Monetary and fiscal policy institutions are necessary to provide an enabling environment in which private investment can flourish. Market economies are not selfregulating, and macroeconomic instability creates risk and uncertainty.

How does the lack of formal institutions hamper economic growth and development? What can individuals do to cope with this situation? Give 3 examples Social insurance institutions. These are necessary if individuals are to accept change. In rural, peasant societies on the margins of subsistence, change may spell disaster, but progress (particularly in agriculture) requires willingness to take risks. Insurance against unemployment, crop failures and price fluctuations for agricultural commodities are all important if traditional agriculture is to be transformed.

How does the lack of formal institutions hamper economic growth and development? What can individuals do to cope with this situation? Give 3 examples Institutions of conflict management. Many developing countries have deep ethnic, tribal and religious divisions. Social conflict damages economies because it diverts resources from directly productive activities, and creates uncertainty, which deters investment. To minimize conflict requires a full range of institutions the rule of law, a fair legal system, a political voice for minority groups

What can individuals do to cope with this situation? Give 3 examples

Vote for the right party Ensure intellectual property rights for your inventions Collective actions in form of unions, clubs and groups Equal opportunities for all entrepreneurs can be role models Corporate social responsibility

A country has a large informal economy (accounting for 60% of the private economy). What is the impact on economic development?
The informal economy refers to activities and income that are partially or fully outside government regulation, taxation, and observation. The main attraction of the undeclared economy is financial. This type of activity allows employers, paid employees, and the self-employed to increase their take-home earnings or reduce their costs by evading taxation and social contributions. On the one hand, informal employment can provide a cushion for workers who cannot find a job in the formal sector. But, on the other hand, it entails a loss in budget revenues by reducing taxes and social security contributions paid and therefore the availability of funds to improve infrastructure and other public goods and services. It invariably leads to a high tax burden on registered labor. A high level of informality also can undermine the rule of law and governance. The fact that a large share of the population is openly ignoring laws, regulations and taxes can weaken the respect citizens have for the state.

A country has a large informal economy (accounting for 60% of the private economy). What is the impact on economic development?
There are various reasons why governments may be concerned about large informal sectors. These include potentially negative consequences for competitiveness and growth, incomplete coverage of formal social programs, undermining social cohesion and law and order, and fiscal losses due to undeclared economic activity. For most governments, these concerns outweigh any advantages that the informal sector offers as a source of job creation and as a safety net for the poor.