<ECONOMIC GROWTH>

--THINK AHEAD--

"If I told you that Suriname has a larger expected GDP growth rate from 2026 to 2030 than China, which is expected to grow by 5.7 trillion USD over the same time period, you would call me crazy, right?"

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⚠️"Look at the visual below, and explain what needs to be made clear when talking about GDP growth."

"That's right, you need to make it clear whether you are talking about '% increase' or 'absolute increase'."

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"So which to use?"

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"In nearly all news and media, like the headline below it refers to '% increase'.

--DEFINITION--

"ECONOMIC GROWTH is defined as a % INCREASE IN REAL GDP that an economy produces over a period of time, the MINIMUM OF TWO CONSECUTIVE QUARTERS (6 MONTHS+)."

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--THINK AHEAD--

"Economic growth must mean the economy has more productive resources, and the LRAS shifts to the right?"

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"Wrong! The economy could have simply moved out of a recession into an expansion rather than adding to its sustainable productive potential."

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"So there are actually two types of economic growth."

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--SHORT-TERM GROWTH--

"SHORT-TERM GROWTH refers to the temporary growth in real GDP that occurs cyclically around the potential growth, and as we know, this is usually the result of re-employing existing resources in recovery phases and then using existing resources more fully in expansionary phases and not a result of new productive resources. In other words, short-term growth is the changes in real GDP that occur primarily during recessionary and expansionary gaps, when the economy is below or above its potential output."

--PPC--

--LONG-TERM--

"LONG-TERM GROWTH is different. It is not about moving toward or around potential GDP. Instead, long-term growth is the sustained increase in potential GDP itself over years or decades. While short-term growth fluctuates with the business cycle, long-term growth comes from expanding the economy's productive capacity via INCREASES IN THE QUANTITY OR QUALITY OF THE FACTORS OF PRODUCTION, e.g., more workers, better education and skills, more machines and factories, and technological innovation."

--PPC--

"Now consolidate your understanding by watching this video!"

--THINK AHEAD--

"If LR REAL GDP GROWTH > POPULATION GROWTH, then GDP per capita will RISE, so this should indicate an IMPROVEMENT IN LIVING STANDARDS, right?"

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--CONSEQUENCES--

...ON INCOME INEQUALITY

"Look at the diagram below and see what conclusions you can make about the relationship between income inequality and GDP growth?"

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"Yes, there is definitely a correlation; we can generally say that the greater the level of GDP per capita, the greater the level of equality", "Can you be equally poor?"

...ON HOUSEHOLD SPENDING

"Often the metric for measuring improvements in well-being is the greater ability to consume goods and services; as such, we can look at how much economic growth can be attributed to household spending ('C') to give you an idea."

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"Have a look at the diagram below and see what conclusions you can make about the relationship between household consumption and GDP growth?" "Any outliers?"

...ON GENDER EQUALITY

"The improvements in income and living standards that real growth brings do not always get shared equally amongst the sexes. In fact, there are numerous indexes that show a clear disparity in favour of males."

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"Have a look at the diagram below and see what conclusions you can make about the relationship between household consumption and GDP growth?" "Any outliers?"

...ON MERIT GOODS

"As output grows, so too do government revenues, as such governments have more funding for merit goods such as schools and hospitals; however, it remains to be seen what they prioritise."

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"Have a look at the diagrams below and see what conclusions you can make about spending on healthcare and education as GDP grows."

...ON THE ENVIRONMENT

"Economic growth implies a GREATER USE OF RESOURCES; therefore, if the attitude is to grow now and clean up later once incomes rise and technology lowers cost then we will be for a full

This way of thinking, is focused entirely on ECONOMIC GROWTH + GREATER INCOMES IN THE PRESENT, and thus resist any changes that may reduce costs such as the use of greener energy technology, or restricted yields to allow for regeneration.

"Hmmm!!, you do realise that these resources are rivalrous in consumption like the fish in the sea, and the clean air in the sky, right?, Once they are gone you can't get them back, and then what?, your children's children won't have access to them at all!!, you are jeapodising future growth for present growth you are guilty of short-terminism"

--SUSTAINABLE GROWTH--

"We need a sustainable growth rate which can meet present needs without compromising the ability of future generations to meet their own needs"

...ON UNEMPLOYMENT

"If the growth was achieved through the use of MORE CAPITAL-INTENSIVE production processes at the expense of labour."

--GROWTH & GREATER INCOME EQUALITY--

The growth and subsequent spending were not just are focused on the development of URBAN AREAS (often coastal) but also more RURAL areas.

--GROWTH & GREATER INCOME INEQUALITY--

The growth and subsequent SPENDING are FOCUSED on the development of URBAN AREAS (often coastal) whilst the rural areas are neglected
The growth was achieved through GREATER TRADE LIBERALISATION and GLOBALISATION, which created both winners and losers, in particular, those formally protected and inefficient domestic industries and their employees suffered from the influx of cheaper substitutes.

--P3 CALCULATING GROWTH--

--% CHANGE IN REAL GDP--

--% CHANGE IN REAL GDP PER CAPITA--

Given that REAL GDP PER CAPITA, is the result of a QUOTIENT: REAL GDP / POPULATION, then the relationship between '% changes', is as follows:

[QUOTIENT RULE] If X = Y/Z then %ΔX = %ΔY - %ΔZ
[PRODUCT RULE] If X = Y * Z then %ΔX = %ΔY + %ΔZ

--RWE: YES!--

If we use the 2020 Human Development Report as a gauge of well-being we can see that the top ten ranked countries also have very high per capita GNI figures, implying that larger economic growth leads to better levels of well-being, however...

--RWE: NO!--

....the report also highlights how Economic growth per capita doesn't always reflect gains in well being as evidenced by the low HDI ranking of Qatar and Brunei, despite their very high GNI per capita values.

--RWE TASK--

Go to ChatGPT and input the prompt below. once you have your tables copy and paste them onto a canvas

Create a table titled 'NEGATIVE CONSEQUENCES of ECONOMIC GROWTH', then for each of the following indicators, HDI RANKINGS, INCOME EQUALITY, LIFE EXPECTANCY, GENDER EQUALITY, ENVIRONMENTAL DAMAGE, and one more indicator of your choice, identify an appropriate measure/index that can be used to measure them. Then identify a country for each indicator that exhibits a RISING GDP PER CAPITA but a WORSENING value/ranking in terms of one of the indicators. For each country, identify the level of change in REAL GDP PER CAPITA over the past decade, then the level of change in the chosen measure/index over the past decade, and finally, provide a possible explanation as to why this may have occurred.
Create a table titled 'POSITIVE CONSEQUENCES of ECONOMIC GROWTH', then for each of the following indicators, HDI RANKINGS, INCOME EQUALITY, LIFE EXPECTANCY, GENDER EQUALITY, ENVIRONMENTAL DAMAGE, and one more indicator of your choice, identify an appropriate measure/index that can be used to measure them. Then identify a country for each indicator that exhibits a RISING GDP PER CAPITA and an IMPROVING value/ranking in terms of one of the indicators. For each country, identify the level of change in REAL GDP PER CAPITA over the past decade, then the level of change in the chosen measure/index over the past decade, and finally, provide a possible explanation as to why this may have occured.

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