This essay seeks to define what economic growth is and its significance in the attainment of development. It will also site some of the limitations of using economic growth as an indicator of development.
Economic growth entails anything that shows gains and particular importance to an economic unit’s contribution towards attaining wealth and improved living standards or welfare. Economic units refer to all participants in the attainment of wealth, trade, resource utilization, and management relative to society’s needs.
Economic growth is the Quantitative change or expansion in a country's economy. Economic growth is conventionally measured as the percentage increase in gross domestic product (GDP) or gross national product (GNP) during one year.
GDP – refers to the total value of all goods and services produced and provided respectively in a given country over a specified period of time, usually one year.
GNP- entails GDP plus all the goods and services that are produced and provided respectively, by nationals of a given country(living abroad or overseas) minus all the goods and services that are produced and provided by foreign nationals resident in that country. Economic growth comes in two forms: an economy can either grow "extensively" by using more resources (such as physical, human, or natural capital) or "intensively" by using the same amount of resources more efficiently (productively). When economic growth is achieved by using more labor, it does not result in per capita income growth. But when economic growth is achieved through more productive use of all resources, including labor, it results in higher per capita income and improvement in people's average standard of living. Intensive economic growth requires economic development.
Economic growth is measured by a ‘real’ increase in the national income figure. The national income is the total value of goods and services produced in a country in a year. When production is increasing then the economy is growing. Factors determining increases in output are both internal and external. Internal factors include the quantity and quality of a country’s factors of production, the amount of scarce economic resources available and their productivity. The external factors result from a country’s relationships with the rest of the world, including the terms of trade.
Economic growth is an important subject in that it affects the measurement of Economic welfare, an improvement in the overall standard of living of the people in any country, more goods and services are available. The quality of life in terms of, for example, the life expectancy in Zambia improving to an average of eighty years or above instead of forty years or less!
The other advantages of economic growth are an improvement in the social sector, better infrastructure, a lower doctor: patient, teacher: pupil ratio etc.
Economic growth may be balanced or unbalanced, that is some sectors and some areas grow faster than others. In Zambia, the mining, agriculture and tourism sectors as well as the some urban areas are expanding faster than others.
Unfortunately, there are a number of disadvantages associated with economic growth. It is associated with a cost, the opportunity cost of diverting resources from present consumption. It also implies that there is faster use of natural resources, it gets depleted quickly. There is need to continuously discover new natural resources to sustain Economic growth. Unfortunately,…