The GDP growth rate is a basic indicator that allows us to know the growth of an economy, but what happens when that growth is not homogeneous because it is concentrated in few segments and does not generate a growth effect of which most of the population can be benefited?
In the beginning of development process, economic growth is important. You cannot give same proportion of development to all sectors with constraint of budget, infrastructure, etc. However, as countries getting advance, it is important to give attention to inequality aspect.
WHAT IS PRACTICAL & WHAT IS IDEAL IN ECONOMIC GROWTH?
GDP growth, for the sake of growth, is the practical objective. Even if the growth may be unequal or create economic gap in the country, any % of growth is worth more than no growth. The risk of no growth and the impending stagnation may be too heavy a burden to ponder; thus, even growth for growth-sake may be better than no growth at all.
As for "quality growth:, it is akin to someone having his/her stomach filled then wonder what kind of food is better? For someone who is starving, such question may be too much of a luxury to contemplate. Ideally, every country would want to have quality growth that would mean better health care, better education, minimal gap in Gini coefficient (minimal income inequality), etc., but such an ideal growth is an ideal---as a policy objective, it is quite difficult to achieve.
It has to be Growth with Quality. Both are critical. If quality is excessively emphasized, growth may take a hit.
The idea is that in order to avoid social conflicts and short term growth, the growth should be shared by all economic agents. There are a lot of interesting index to use to measure the way the growth is shared or not. The most famous is the Gini Index, but there exist a lot of them. For example the Palma index, the Relative Index of Inequality etc..
GDP is the most important indicator. However, we have always analyzed its structure, reminding you of the Keynes equation. For example, in Russia now attach great importance to the element of GDP-investment
The source of the growth is important - is it sustainable growth or is it a temporary phenomenon?
The drivers of the GDP growth should be considered as well - domestic demand or external markets . If the GDP growth is determined by exports, then the country's economy is heavily dependent on processes in other countries.
Growth is fundamental, it represents greater availability of goods and services to the population. It is not an easy challenge because competition causes relative prices to fall over time. As a result, innovation is crucial to fueling growth.
For over all development I.e economy as a whole qualitative aspect is more important.
Both growth rate and quality of growth in real GDP are important for a healthy economy of any country. We can actually determine both and these can help in decision making in maintaining economic stability and subsequently culminating to economic development- in raising the standard of living of the people.
The quality growth of GDP is more important because, what is know, inflation reduces real volume of the product.
both are equally important it depends on the aspects of the measurement towhich we would like to determine.
The world has been in the process of substituting the GDPs in terms of measurement.
- Badges
- Science topic
- Similar topics
- Computer Science
- Computer Communications (Networks)
- Internet