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Economic growth - Coggle Diagram
Economic growth
causes
supply side
quantity of factors of production
labour force
eg inflow of migrants, shift in demographic structure
availability of natural resources
discovery of new sources
capital stock (investment in phy capital & econ infrastructure)
plant, equipment, building
positive net investment
quality of factors of production
labour productivity
output per hr per worker
through training, upskilling
land productivity
capital efficiency
level of tech
Demand side factors
Short run increase in AD
Investment increasing productive capacity
Structural factors(good environment promoting growth)
External factors(increase export(x))
Policies to encourage this
Fiscal policy(government)
monetary policy
Aggregate supply policies such as education/ development of infrastructure and r and d for tech
consequences
benefits
increased consumption
higher SOL
avoid other macroeconomic problems
eg high inflation, balance of payments, industrial disputes
easier redistribution of income
more care for environment
costs
Opportunity cost of growth(could have produced consumption goods)
Environmental costs and depletion of resources
Income distribution
Effects on employment(change of required skills)
Social effects(stress)
Balance of payments
Can be expressed in a graph
actual economic growth
is measured by
Real GDP= Nominal GDP/GDP deflator x 100
Is a part of
Economic development
Measurement
Economic indicators(real GDP per capita)
Non-Economic indicators(PQLI/MEW/HDI)
includes
Inclusive growth
Growth and development
Inclusion
Intergenerational equity and sustainability
