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Social
accounting and global trade 3
Yvonne
Harvey, Contributor
It
is always good to communicate with
you all through this medium. I sincerely
hope that you are doing well and that
you are really getting into the principles
of business syllabus. As we get closer
to the final examination, it would
be in your best interest to begin
looking at and practising past paper
questions. It would also be good for
you to do some serious revision, especially
in the areas you find difficult to
grasp. Let us now look at economic
development and economic growth.
The
distinction between economic growth
and development
Economic
growth is a quantitative concept;
that is, it deals with numbers or
figures or amounts. It refers to the
real growth in or expansion in national
output, and is most often measured
in terms of real Gross Domestic Product
(GDP).
The
concept of economic growth is positive.
This means it always refers to an
increase in output. Negative growth,
while quantitative, as is economic
growth, refers to a decrease in the
national output.
The
production possibilities frontier
can be used to illustrate economic
growth. A production possibilities
curve is a curve showing all the possible
combinations of two goods that can
be produced using up all the resources
and at a given state of technology.
When economic growth takes place,
the production possibilities curve
shifts to the right. The curve may
shift to the right and economic growth
results if the productivity of labour
or other factors of production improve;
if there is an improvement in technology;
or if there is an increase in resources.
Try
to find a diagram of a production
possibilities curve. Copy it into
your notebooks then shift the curve
to the right. The first curve represents
production possibilities for the country
NOW, and the second one will represent
the production possibilities at a
future date, for example, five years
later.
Economic
development is qualitative and refers
to the process by which the standard
of living and the well-being of the
entire nation are improved by raising
real per capita income. Economic well-being
is concerned with the quality of housing,
clothing, education, food, health,
peace of mind, security, eradication
of poverty and eradication of inequalities
in income and wealth, and so on. If
any of these factors increases or
improves, there will be economic development.
Human
resource development looks at improving
the human resources of labour and
entrepreneurship. Improvement of labour
and the entrepreneur means that the
productivity of both will increase.
In turn, there will likely be an increase
in economic growth and development.
The
human resource can be improved through
education, training or retraining,
improved health facilities, improved
working conditions and an improvement
in the factors of production that
they have to work with.
The
role of education in economic growth
and development
Improved
education and training means that
labour and entrepreneurship will now
have greater capacity to increase
the national output and improve the
well-being of the nation. Through
education and training, labourers
may learn new and more efficient methods
of production and, thereby, increase
the overall output. The entrepreneur
might learn how to better organise
and bear risks, thereby, causing improved
output and improved economic well-being.
Education, thus, improves the productivity
and efficiency of both of the human
factors.
Now
for your homework:
(a)
Distinguish between economic growth
and economic development (6 marks)
(b)
Why is economic growth regarded as
a quantitative concept while economic
development is regarded as a qualitative
concept? (4 marks)
(c)
Discuss TWO factors that might result
in economic growth and TWO factors
that might result in economic development
(8 marks)
(d)
Explain ONE way in which education
can cause economic growth and development
(2 marks)
Total
marks: 20
See
you next week.
Yvonne
Harvey teaches at Glenmuir High School.
Send questions and comments to kerry-ann.hepburn@gleanerjm.com
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