Issue in Global Economy Essay

Submitted By zhangzhangzhang
Words: 1289
Pages: 6

Robert Reich conducted a study on the discussion about the reason for growth benefit. His article aimed to argue that economic growth is good. The critical review reveals that economic growth is good in general as Robert argued, however in contract of the author’s view, faster growth is not always better than slower growth. In addition, faster growth cannot make a wider gains distribution and it even have reverse effect. Furthermore, Robert’s argument is flawed because data in the critical analysis prove that richer countries emit more pollutions than poorer countries. The detail critical analysis is presented as following.

For the first place, the point of Robert Reich’s article is that economic growth is good. As the author argued that growth is not only the increase of stuff but also the capacity of that a nation can improve the quality of people’s life. (Investopedia, 2009) a reasonable growth can encourage more social virtues and improve the people’s live level.
In the second place, although economic growth will boost development, too fast growth can have bad effect. The article states a point view that faster growth has more positive impact than slower growth in terms of several aspects. However a too fast growth could lead to some environmental problem such as pollution and high inflation rate. (Fortunecity, 2011) For example, as china was engaged in its economy growth, its rapid development was based on heavy industry expansion. And this required huge contribution of energy such as coal. (Nytimes, 2007) In addition, too rapid growth will result in high inflation. Take china as an example, its fast growth not only increased the country’s economic but also bought about obstinately high inflation. And this intimidated to economy overheat and challenged china’s long-term prosperous. To be more specific, the fixed asset investment in china bounded 25 % from last year level while actual estate investment climbed 37%. Furthermore, Wantchinatimes (2011) reported that gas prices in china increased sharply even surpass US Gasoline prices, which went up from $3.82 a gallon in 2009 to around $4.50 a gallon in 2011. As a result, too fast growth will have negative impact to a country. Two main concerns which are high inflation phenomena and environment damage should be taken into account. (tutor2u, 2006) To some extent fast growth can boost live level of a country, however there is still limitation that Robert Reich should concern, which faster growth is not definitely better than slower growth in terms of environment and inflation aspects.
Besides, from another Robert’s point of perspective, faster growth tend to promote a wider wealth distribution. His view has limitation that faster growths cannot wider distribution of gains and it even has reverse effect. This point can be confirmed by the example of China. To be more specific, as the second biggest economy behind U.S., China has kept growing at an average annual around 10% percent rate for the recent 30 years. (CNNmoney, 2012) however, China's Gini-coefficient in 2010 reached 0.47, which reveals that China is suffering from heavily inequality of wealth distribution. (Gini-coefficient is a method to measure the degree of distribution of wealth. A value of one means tremendous inequality.) Nevertheless a value of 0.4 levels is considered as dangerous level in term of international standard; china has passed the warning level in the mid-2000s and even exceeded the degree of inequality of wealth distribution in U.S. while persist on increasing growth at high speed. (BBC, 2011) A Statistics of China indicates that there is huge and increasing distribution gap between urban and rural parts. The inequality of wealth distribution in China continued to grow since 1978, while its fast economic growth obviously took place these three decades. Nonetheless the middle class of China increased from 65.5millions to 80 millions in 2005 to 2008, and the number