ECONOMIC GROWTH AND
DEVELOPMENT
Group 8
Cawagas, Fedelene Joy
Deleste, Krisha Nicole
De Juan, Roevarc
Falsis, Hamuel Illiel
Gaitan, Aurora Demi Doreen
Tumabotabo, Anne Rae
What is Economic Growth?
Increase in a country's real
level of national output.
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.
Does not take into account the
depletion of natural resources
which might lead to pollution,
congestion & disease.
Measures an increase in Real
GDP. (real Output).
GDP is a measure of the
national income / national
output and national
expenditure. It basically
measures the total volume of
goods and services produced
in an economy.
Economic Development
Increase in living standards,
improvement in self-esteem
needs and freedom from
oppression as well as a greater
choice.
Most accurate method of
measuring development is
the Human Development
Index which takes into account
the literacy rates & life
expectancy
which affect productivity and
could lead to Economic Growth.
Leads to the creation of more
opportunities in the sectors of
education, healthcare,
employment and the
conservation of the
environment.
Implies an increase in the per
capita income
Is concerned with how people
are actually affected.
Looks at the actual living
standards of every citizen.
Economic Development versus Economic Growth
Economic Development
Economic development
implies changes in income,
savings and investment
along with progressive
Implications changes in socio-economic
structure of country
(institutional and
technological changes).
Development relates to
growth of human capital
indexes, a decrease in
Factors inequality figures, and
structural changes that
improve the general
population's quality of life.
Qualitative.HDI (Human
Development Index),
gender- related index (GDI),
Measurement Human poverty index (HPI),
infant mortality, literacy rate
etc.
Economic Growth
Economic growth refers to
an increase in the real
output of goods and services
in the country.
Growth relates to a gradual
increase in one of the
components of Gross
Domestic Product:
consumption, government
spending, investment, net
exports.
Quantitative. Increases in
real GDP.
Continuation
Brings qualitative
and quantitative
Effect changes in the
economy
Economic development
is more relevant to
measure progress and
quality of life in
Relevance developing nations.
Concerned with
Scope structural changes in the
economy
Brings quantitative
changes in the
economy
Economic growth is a
more relevant metric for
progress in developed
countries. But it's widely
used in all countries
because growth is a
necessary condition for
development.
Growth is concerned
with increase in the
economy's output
Stages of Economic Growth
and Development
Rostow's
stages
of
growth
Walt Whitman Rostow
Born 1916
American economist and political theorist
Johnsons Special Assistant for National Security
Affairs
A staunch anti-Communist
A champion of capitalism and free enterprise
Author ofThe Stages of Economic Growth: A
non-Communist Manifesto (1960)
Rostows stages of economic growth
identifies 5 stages of development,
applicable to all societies, but viewed
from a market perspective.
The Stages of Economic Growth
Modernization occurs in five basic stages
Traditional society
Pre-conditions for take-off
Take-off
Drive to maturity
Age of high mass consumption
All countries go through these stages fairly linearly
TRADITIONAL SOCIETIES
Fatalistic
Norms of economic growth are completely absent in a
traditional society
Believing that humans have limited capacity to change
the world
Weak national government
PRECONDITIONS TO TAKE-OFF
A strong national government
Popularization of secular education
Capital mobilization for productive purposes
Rise of entrepreneurial class
Start of manufacturing
TAKE-OFF
Start of sector-led growth
Society driven by economy rather than traditions
Society in transition to a modern economy
DRIVE TO MATURITY
Diversification of production
New sectors taking shape
Reduced poverty & rising living standards
AGE OF HIGH MASS CONSUMPTION
A society of general affluence
Durable goods as opposed to subsistence
concerns
Arts and music as opposed to money and
prestige
Backwardness model
n Alexander Gerschenkron
n "If you don't move forward, sooner or later you
begin to move backward."
n Is often contrasted with Rostovian take-off
model, which is more linear ans structuralist planning it out with different stages.
The more backward the economy:
The more likely intervention by special
institutions will be necessary to properly channel
physical capital and human capital to industries.
The greater the emphasis on the production of
producer goods than consumer goods.
The greater the emphasis on capital-intensive
production rather than labor-intensive
production.
The more backward the economy:
The greater the scale of production and
enterprise.
The greater the reliance on borrowed rather than
indigenous technologies.
The smaller the role of the agricultural sector as
a market for new industries.
The greater the reliance on productivity growth.
Formula for calculating
Economic Growth
where GDP = previous yea
GDP
GDP = present yea
GDP
We can express the rate of growth in, for example,
the period 2004-2005, as follows:
Growth rate of GDP = [GDP(2005) GDP(2004)]/ GDP(2004) 100
U.S. real GDP in 2004 was 10.76 trillion and in
2005 it was 11.13 trillion. Thus the growth rate of
real U.S. GDP from 2004 to 2005 was
(11.13 10.76) / 10.76 = (0.37) / 10.76 =
0.034 or 3.4%
Formula used in
calculating the
Gross National
Product
Gross national product
(GNP)is the total value of final
goods and services produced
during a given period by the
citizens of a country no matter
where they live. The goods and
GNP
services
are produced
by the
are expressed
in monetary
nationals
of aon
country.
terms,
thus rely
the
markets to establish the
relative values of goods and
services.
The formula for GNP is:
GNP = Consumption +
Government Expenditures
+Investments+ Exports +
Foreign Production by U.S.
Companies Domestic
Production by Foreign
Companies
How it works :
GNP includesincomeearned by citizens
and companies abroad, but does not
include income earned by foreigners
within the country.
The figures used to assess GNP include
the manufacturing of tangible goods
(cars, furniture and agricultural
products) and the provision of services
(education, healthcare, and business
services).
GNP does not include the services used
Methods used to assess
Economic Development
Methods used to assess Economic
Development
GNP per capita
Population Growth
Occupational Structure of the Labor Force
Urbanization
Consumption per capita
Infrastructures
GNP per Capita
GNP is the total market value of all final goods
and services produced by a country in one year.
It is a measure of economic activity, or how
much is produced in a country. The more that a
country produces per person , the more
"developed" it is assumed to be.
Population Growth
In general, poorer countries have more
rapid rates of population growth thus
affecting their economic development in a
way that there is an unequal distribution
of goods and services especially among
large, poor families.
Occupational Structure of the Labor Force
As countries develop, the occupational structure
of the labor force changes. In least developed
countries, most people are engaged in primary
activities like agriculture, fishing, mining and
lumbering. In high income countries like the
United states most people are involved with the
tertiary sector like retailing, transportation,
education and banking. The better the labor
force opportunities signifies a more developed
country.
Urbanization
Urbanization is the percentage of a country's
population who live in urban areas.
Urban areas generally means in towns and cities
of 2,500 or more people.
Currently just less than half of the worlds
population live in urban areas.
Generally as countries develop urbanization
increases.
Consumption per capita
Consumption per person is a good indicator of
development. The richer a country is, the more
its citizens consume.
Infrastractures
A country's infrastructure is defined by our author as
"the foundations of a society: urban centers,
transport networks, communications, energy
distribution systems, farms, factories, mines, and
such facilities as schools, hospitals, postal services,
and police and armed forces."
For instance, the development of the transportation
system as a measure of its length per area of land has
a greater degree of economic development assumed
because of its transportation infrastractures.
Issues and Problems on
Economic Growth
Garbage
Over
Population
Pollution
Corruption
Depletion of our
natural resources
Cheap imports and
developing market of
exports
Congestion
Loss of
Biodiversity
List of Countries according to
Stages of Economic Growth.
Top 10 Competitive Countries in the World 2014-2015 report
Rank
1
2
3
4
5
6
7
8
9
10
Country
Switzerland
Singapore
United States
Finland
Germany
Japan
Hong Kong SAR
Netherlands
United Kingdom
Sweden
Value
5.7
5.6
5.5
5.5
5.5
5.5
5.5
5.5
5.4
5.4
Source: http://reports.weforum.org/global-competitiveness-report2014-2015/
10 Most Developed Countries in the World 2015 (HDI)
Ran
k
Country
HDI Score
Norway
0.944
Australia
0.933
Switzerland
0.917
Netherlands
0.915
United States
0.914
Germany
0.911
New Zealand
0.910
Canada
0.902
Singapore
0.901
10
Denmark
0.900
Source: http://www.richestlifestyle.com/10-most-developedcountries-in-the-world/
Top 10 Richest Countries 2015
Rank
Country
GDP per Capita (est.)
Qatar
$145,894
Luxembourg
$90,333
Singapore
$78,762
Brunei
$73,823
Kuwait
$70,785
Norway
$64,363
United Arab
Emirates
$63,181
San Marino
$62,766
Switzerland
$53,977
10
United States
$53,001
Source: http://mixtopten.com/top-10-richest-countries-for-2015/
