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Encyclopedia > Economic growth
World GDP/capita changed very little for most of human history before the industrial revolution. (Note the empty areas mean no data, not very low levels. There are data for the years 1, 1000, 1500, 1600, 1700, 1820, 1900, and 2003.)
World GDP/capita changed very little for most of human history before the industrial revolution. (Note the empty areas mean no data, not very low levels. There are data for the years 1, 1000, 1500, 1600, 1700, 1820, 1900, and 2003.)

Economic growth is the increase in value of the goods and services produced by an economy. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP. Growth is usually calculated in real terms, i.e. inflation-adjusted terms, in order to net out the effect of inflation on the price of the goods and services produced. In economics, "economic growth" or "economic growth theory" typically refers to growth of potential output, i.e., production at "full employment," which is caused by growth in aggregate demand or observed output. Image File history File links Question_book-3. ... Image File history File links Download high resolution version (1023x783, 44 KB) Summary Data Source: Angus Maddisons World Population, GDP and Per Capita GDP, 1-2003 AD (This Microsoft Excel file can also be read by using the free Open office) at The Groningen Growth and Development Centre. ... Image File history File links Download high resolution version (1023x783, 44 KB) Summary Data Source: Angus Maddisons World Population, GDP and Per Capita GDP, 1-2003 AD (This Microsoft Excel file can also be read by using the free Open office) at The Groningen Growth and Development Centre. ... GDP is an acronym which can stand for more than one thing: (in economics) an abbreviation for Gross Domestic Product. ... A Watt steam engine, the steam engine that propelled the Industrial Revolution in Britain and the world. ... GDP redirects here. ... In economics, the distinction between nominal and real numbers is often made. ... Face-to-face trading interactions on the New York Stock Exchange trading floor. ... In economics, potential output (also referred to as natural real gross domestic product) refers to the highest level of real Gross Domestic Product output that can be sustained over the long term. ... In economics, full employment has more than one meaning. ... In economics, aggregate demand is the total demand for goods and services in the economy (Y) during a specific time period. ...


As an area of study, economic growth is generally distinguished from development economics. The former is primarily the study of how rich countries can advance their economies. The latter is the study of how poor countries can catch up with rich ones. This article does not cite any references or sources. ...


As economic growth is measured as the annual percent change of gross domestic product (GDP), it has all the advantages and drawbacks of that measure.

Contents

Short-term stabilization and long-term growth

Economists draw a distinction between short-term economic stabilization and long-term economic growth. The topic of economic growth is primarily concerned with the long run.


The short-run variation of economic growth is termed the business cycle, and almost all economies experience periodical recessions. The cycle can be a misnomer as the fluctuations are not always regular. Explaining these fluctuations is one of the main focuses of macroeconomics. There are different schools of thought as to the causes of recessions but some consensus- see Keynesianism, Monetarism, New classical economics and New Keynesian economics. Oil shocks, war and harvest failure are obvious causes of recession. Short-run variation in growth has generally dampened in higher income countries since the early 90s and this has been attributed, in part, to better macroeconomic management. The business cycle or economic cycle refers to the fluctuations of economic activity about its long term growth trend. ... In macroeconomics, a recession is a decline in a countrys real gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year. ... Circulation in macroeconomics Macroeconomics is a branch of economics that deals with the performance, structure, and behavior of a national economy as a whole. ... Keynesian economics, or Keynesianism, is an economic theory based on the ideas of John Maynard Keynes, as put forward in his book The General Theory of Employment, Interest and Money, published in 1936 in response to the Great Depression of the 1930s. ... Monetarism is a set of views concerning the determination of national income and monetary economics. ... New Classical Economics emerged as a school in Macroeconomics during the 1970s. ... New Keynesian economics developed partly in response to new classical economics. ...


The long-run path of economic growth is one of the central questions of economics; in spite of the problems of measurement, an increase in GDP of a country is generally taken as an increase in the standard of living of its inhabitants. Over long periods of time, even small rates of annual growth can have large effects through compounding (see exponential growth). A growth rate of 2.5% per annum will lead to a doubling of GDP within 28 years, whilst a growth rate of 8% per annum (experienced by some Four Asian Tigers) will lead to a doubling of GDP within 9 years. This exponential characteristic can exacerbate differences across nations. For example, the difference in the annual growth from country A to country B will multiply up over the years. A growth rate of 5% seems similar to 3%, but over two decades, the first economy would have grown by 165%, the second only by 80%. Face-to-face trading interactions on the New York Stock Exchange trading floor. ... In mathematics, exponential growth (or geometric growth) occurs when the growth rate of a function is always proportional to the functions current size. ... Korean name Hangul: Skyline of Central, Hong Kongs financial centre (viewed from Victoria Peak, Hong Kong) Seoul, the capital of South Korea The skyline of Singapores town area at dusk. ...


In the early 20th century, it became the policy of most nations to encourage growth of this kind. To do this required enacting policies, and being able to measure the results of those policies. This gave rise to the importance of econometrics, or the field of creating measurements for underlying conditions. Terms such as "unemployment rate", "Gross Domestic Product" and "rate of inflation" are part of the measuring of the changes in an economy. Econometrics is concerned with the tasks of developing and applying quantitative or statistical methods to the study and elucidation of economic principles. ... GDP redirects here. ...


In mainstream economics, the purpose of government policy is to encourage economic activity without encouraging the rise in the general level of prices (in other words, increase GDP without creating inflation). This combination is seen as, at the macro-scale (see macroeconomics) to be indicative of an increasing stock of capital. The argument runs that if more money is changing hands, but the prices of individual goods are relatively stable, then it is proof that there is more productive capacity, and therefore more capital, because it is capital that is allowing more to be made at a lower cost per unit. See Economies of scale, Inflation, Hyperinflation, Price, Supply and demand. Circulation in macroeconomics Macroeconomics is a branch of economics that deals with the performance, structure, and behavior of a national economy as a whole. ... The increase in output from Q to Q2 causes a decrease in the average cost of each unit from C to C1. ... In economics, hyperinflation is inflation that is out of control, a condition in which prices increase rapidly as a currency loses its value. ... In economics and business, the price is the assigned numerical monetary value of a good, service or asset. ... The supply and demand model describes how prices vary as a result of a balance between product availability at each price (supply) and the desires of those with purchasing power at each price (demand). ...


Measuring growth

GDP increase since 1990, in major countries.
GDP increase since 1990, in major countries.
World map showing GDP real growth rates for 2007.
World map showing GDP real growth rates for 2007.

The real GDP per capita of an economy is often used as an indicator of the average standard of living of individuals in that country, and economic growth is therefore often seen as indicating an increase in the average standard of living. This could have the overall effect of an increased GDP per capita but with a lower standard of living for many or even the majority population. Image File history File links Download high resolution version (951x589, 81 KB)Gross domestic product growth in the advanced economies, accumulated for the periods 1990 - 1999 and 1990 - 2006. ... Image File history File links Download high resolution version (951x589, 81 KB)Gross domestic product growth in the advanced economies, accumulated for the periods 1990 - 1999 and 1990 - 2006. ... GDP is an acronym which can stand for more than one thing: (in economics) an abbreviation for Gross Domestic Product. ... Here is a list of countries of the world sorted by their Gross domestic product (PPP) per capita, the value of all final goods and services produced within a nation in a given year, divided by population as of 1 July for the same year. ... The standard of living refers to the quality and quantity of goods and services available to people and the way these services and goods are distributed within a population. ...


There are several problems in using growth in GDP per capita to measure general well-being.

  • GDP per capita growth varies depending on the basket of goods used to deflate the nominal value or on the base year of measure.
  • GDP per capita does not provide any information relevant to the distribution of income in a country.
  • GDP per capita does not take into account negative externalities from environmental damage consequent to economic growth. Thus, the amount of growth may be overstated once we take environmental damage into account.
  • GDP also includes negative expenditures, such as repairing pulluted water supplies or building prisons.
  • GDP per capita does not take into account positive externalities that may result from services such as education and health.
  • GDP per capita excludes the value of all the activities that take place outside of the market place (such as cost-free leisure activities like hiking).
  • GDP per capita does not include activities of the informal sector of the economy in precise form. Only as approximate estimates.
  • GDP per capita does not account for purchases on goods that were not produced in a given fiscal year, such as used cars or houses.
  • GDP per capita does not provide any information about the appreciation or depreciation of goods already produced, which may reflect a change in standard of living. (dilapidation in residential buildings, for example)

Economists are well aware of these deficiencies in GDP, thus, it should always be viewed merely as an indicator and not an absolute scale. Economists have developed mathematical tools to measure inequality, such as the Gini Coefficient. There are also alternate ways of measurement that consider the negative externalities that may result from pollution and resource depletion (see Green Gross Domestic Product.) Graphical representation of the Gini coefficient The Gini coefficient is a measure of inequality of income distribution or inequality of wealth distribution. ... Green Gross Domestic Product (Green GDP) is an index of economic growth with the environmental consequences of that growth factored in. ...


The flaws of GDP may be important when studying public policy, however, for the purposes of economic growth in the "short" long run it tends to be a very good indicator (in the very long run it is greatly distorted by the large changes in relative prices and sectors in the economy). There is no other indicator in economics which is as universal or as widely accepted as the GDP.


Other measures of national income, such as the Index of Sustainable Economic Welfare or the Genuine Progress Indicator, have been developed in an attempt to give a more complete picture of the level of well-being, but there is no consensus as to which, if any, is a better measure than GDP. GDP still remains by far the most often-used measure, especially since, all else equal, a rise in real GDP is correlated with an increase in the availability of jobs, which are necessary to most individuals' survival. Template:Push up GNP redirects here. ... The Index of Sustainable Economic Welfare is an economic indicator intended to replace the Gross domestic product. ...


The history of economic growth theory

Origins of the concept and theories of economic growth

In 1377, the Arabian economic thinker Ibn Khaldun provided one of the earliests descriptions of economic growth in his famous Muqaddimah (known as Prolegomena in the Western world): Islamic economics in practice. ... Ibn Khaldūn or Ibn Khaldoun (full name, Arabic: , ) (May 27, 1332 AD/732 AH – March 19, 1406 AD/808 AH), was a famous Berber Muslim polymath: a historian, historiographer, demographer, economist, philosopher, political theorist, sociologist and social scientist born in present-day Tunisia. ... The Muqaddimah, or the Muqaddimah of Ibn Khaldun (Arabic: مقدّمة ابن خلدون), records an early Muslim view of universal history. Many modern thinkers view it as one of the first works of sociology. ... Occident redirects here. ...

"When civilization [population] increases, the available labor again increases. In turn, luxury again increases in correspondence with the increasing profit, and the customs and needs of luxury increase. Crafts are created to obtain luxury products. The value realized from them increases, and, as a result, profits are again multiplied in the town. Production there is thriving even more than before. And so it goes with the second and third increase. All the additional labor serves luxury and wealth, in contrast to the original labor that served the necessity of life."[1]

In the early modern period, some people in Western European nations developed the idea that economies could "grow", that is, produce a greater economic surplus which could be expended on something other than mere subsistence. This surplus could then be used for consumption, warfare, or civic and religious projects. The previous view was that only increasing either population or tax rates could generate more surplus money for the Crown or country. The early modern period is a term initially used by historians to refer mainly to the post Late Middle Ages period in Western Europe (Early modern Europe), its first colonies marked by the rise of strong centralized governments and the beginnings of recognizable nation states that are the direct antecedents... A current understanding of Western Europe. ...


Now it is generally recognized that economic growth also corresponds to a process of continual rapid replacement and reorganization of human activities facilitated by investment motivated to maximize returns. This exponential evolution of our self-organized life-support and cultural systems is remarkably creative and flexible, but highly unpredictable in many ways. Since science still has no good way of modeling complex self-organizing systems, various efforts to model the long term evolution of economies have produced few useful results. In mathematics, exponential growth (or geometric growth) occurs when the growth rate of a function is always proportional to the functions current size. ...


During much of the "Mercantilist" period, growth was seen as involving an increase in the total amount of specie, that is circulating medium such as silver and gold, under the control of the state. This "Bullionist" theory led to policies to force trade through a particular state, the acquisition of colonies to supply cheaper raw materials which could then be manufactured and sold. A painting of a French seaport from 1638, at the height of mercantilism. ... The Theory & Its Origins Bullionism is an economic theory that defines wealth by the amount of precious metals owned. ...


Later, such trade policies were justified instead simply in terms of promoting domestic trade and industry. The post-Bullionist insight that it was the increasing capability of manufacturing which led to policies in the 1700s to encourage manufacturing in itself, and the formula of importing raw materials and exporting finished goods. Under this system high tariffs were erected to allow manufacturers to establish "factories". Local markets would then pay the fixed costs of capital growth, and then allow them to export abroad, undercutting the prices of manufactured goods elsewhere. Once competition from abroad was removed, prices could then be increased to recoup the costs of establishing the business. This article or section does not cite any references or sources. ...


Under this theory of growth, the road to increased national wealth was to grant monopolies, which would give an incentive for an individual to exploit a market or resource, confident that he would make all of the profits when all other extra-national competitors were driven out of business. The "Dutch East India company" and the "British East India company" were examples of such state-granted trade monopolies. This article is about the trading company. ... The British East India Company, sometimes referred to as John Company, was the first joint-stock company (the Dutch East India Company was the first to issue public stock). ... This article is about the economic term. ...


In this period the view was that growth was gained through "advantageous" trade in which specie would flow in to the country, but to trade with other nations on equal terms was disadvantageous. It should be stressed that Mercantilism was not simply a matter of restricting trade. Within a country, it often meant breaking down trade barriers, building new roads, and abolishing local toll booths, all of which expanded markets. This corresponded to the centralization of power in the hands of the Crown (or "Absolutism"). This process helped produce the modern nation-state in Western Europe. Absolutism is a political theory which argues that one person, who is often generally a monarch, should hold all power. ... The term nation-state, while often used interchangeably with the terms unitary state and independent state, refers properly to the parallel occurence of a state and a nation. ...


Internationally, Mercantilism led to a contradiction: growth was gained through trade, but to trade with other nations on equal terms was disadvantageous. This – along with the rise of nation-states – encouraged several major wars.


Classical growth theory

The modern conception of economic growth began with the critique of Mercantilism, especially by the physiocrats and with the Scottish Enlightenment thinkers such as David Hume and Adam Smith, and the foundation of the discipline of modern political economy. The theory of the physiocrats was that productive capacity, itself, allowed for growth, and the improving and increasing capital to allow that capacity was "the wealth of nations". Whereas they stressed the importance of agriculture and saw urban industry as "sterile", Smith extended the notion that manufacturing was central to the entire economy. The Physiocrats were a group of economists who believed that the wealth of nations was derived solely from agriculture. ... The Scottish Enlightenment was a period of intellectual ferment in Scotland, running from approximately 1740 to 1800. ... For other persons named David Hume, see David Hume (disambiguation). ... For other persons named Adam Smith, see Adam Smith (disambiguation). ... The Politics series Politics Portal This box:      Political economy was the original term for the study of production, the acts of buying and selling, and their relationships to laws, customs and government. ...


David Ricardo would then argue that trade was a benefit to a country, because if one could buy a good more cheaply from abroad, it meant that there was more profitable work to be done here. This theory of "comparative advantage" would be the central basis for arguments in favor of free trade as an essential component of growth. David Ricardo (18 April 1772–11 September 1823), a political economist, is often credited with systematizing economics, and was one of the most influential of the classical economists, along with Thomas Malthus and Adam Smith. ... In economics, David Ricardo is credited for the principle of comparative advantage to explain how it can be beneficial for two parties (countries, regions, individuals and so on) to trade if one has a lower relative cost of producing some good. ... Free trade is an economic concept referring to the selling of products between countries without tariffs or other trade barriers. ...


Income per capita was essentially flat until the industrial revolution. This period of time is called the Malthusian period, since it was governed by the principles explained by Thomas Malthus in his "Essay on the Principle of Population." In essence, Malthus said that any growth in the economy would translate into a growth in population. Thus, although aggregate income could increase, income per capita was bound to stay roughly constant. The mainstream theory of economic growth states that with the industrial revolution and advancements in medicine, life expectation increased, infant mortality decreased, and the payoff to receiving an education was higher. Thus, parents began to place more value on the quality of their children and not on the quantity. This led to a drop in the fertility rates of most industrialized nations. This is known as the breakdown of the Malthusian regime. With income increasing faster than population growth, industrialised economies substantially increased their incomes per capita in the next centuries. A Watt steam engine, the steam engine that propelled the Industrial Revolution in Britain and the world. ... Thomas Robert Malthus FRS (13 February 1766 – 23 December 1834),[1] was a political economist and British demographer. ...


The neo-classical growth model

The notion of growth as increased stocks of capital goods (means of production) was codified as the Solow-Swan Growth Model, which involved a series of equations which showed the relationship between labor-time, capital goods, output, and investment. In this modern view, the role of technological change became crucial, even more important than the accumulation of capital. This model, developed by Robert Solow[2] and Trevor Swan[3] in the 1950s, was the first attempt to model long-run growth analytically. This model assumes that countries use their resources efficiently and that there are diminishing returns to capital and labor increases. From these two premises, the neo-classical model makes three important predictions. First, increasing capital relative to labor creates economic growth, since people can be more productive given more capital. Second, poor countries with less capital per person will grow faster because each investment in capital will produce a higher return than rich countries with ample capital. Third, because of diminishing returns to capital, economies will eventually reach a point at which no new increase in capital will create economic growth. This point is called a "steady state". The Exogenous growth model, also known as the Neo-classical growth model or Solow growth model is a term used to sum up the contributions of various authors to a model of long-run economic growth within the framework of neoclassical economics. ... The Exogenous growth model, also known as the Neo-classical growth model or Solow growth model is a term used to sum up the contributions of various authors to a model of long-run economic growth within the framework of neoclassical economics. ... A technological change is a term that is used in economics to describe a change in the set of feasible production possibilities. ... Most generally, the accumulation of capital refers simply to the gathering or amassment of objects of value; the increase in wealth; or the creation of wealth. ... Robert Merton Bob Solow (born August 23, 1924) is an American economist particularly known for his work on the theory of economic growth. ... Trevor Swan, 1918-1989 was an Australian economist. ... Economic efficiency is a general term for the value assigned to a situation by some measure designed to capture the amount of waste or friction or other undesirable economic features present. ... In economics, diminishing returns is the short form of diminishing marginal returns. ... The steady-state is a condition of the economy in which output per worker and capital per worker do not change over time. ...


The model also notes that countries can overcome this steady state and continue growing by inventing new technology. In the long run, output per capita depends on the rate of saving, but the rate of output growth should be equal for any saving rate. In this model, the process by which countries continue growing despite the diminishing returns is "exogenous" and represents the creation of new technology that allows production with fewer resources. Technology improves, the steady state level of capital increases, and the country invests and grows. The data does not support some of this model's predictions, in particular, that all countries grow at the same rate in the long run, or that poorer countries should grow faster until they reach their steady state. Also, the data suggests the world has slowly increased its rate of growth.[4]


Development economics

Main article: development economics

The latter half of the 20th century, with its global economy of a few very wealthy nations and many very poor nations, led to the study of how the transition from subsistence and resource-based economies to production and consumption based-economies occurred. This led to the field of development economics, including the work of Nobel laureates Amartya Sen and Joseph Stiglitz. This article does not cite any references or sources. ... This article does not cite any references or sources. ... Winners of the Nobel prize are scientists, writers and peacemakers who have been awarded in their field of endeavour, and who are known collectively as either Nobel laureates or Nobel Prize winners. ... Amartya Kumar Sen CH (Hon) (Bengali: Ômorto Kumar Shen) (born 3 November 1933), is an Indian economist, philosopher, and a winner of the Bank of Sweden Prize in Economic Sciences (Nobel Prize for Economics) in 1998, for his contributions to welfare economics for his work on famine, human development theory... Joseph Stiglitz (born February 9, 1943) is an American economist, author and winner of Nobel Prize for economics ( 2001). ...


New growth theory

Growth theory advanced again with the theories of economist Paul Romer in the late 1980s and early 1990s. Other important new growth theorists include Robert E. Lucas and Robert J. Barro. In economics, endogenous growth theory or new growth theory was developed in the 1980s as a response to criticism of the neo-classical growth model. ... Paul Michael Romer is an economist and professor at Stanford University. ... Robert Emerson Bob Lucas, Jr. ... Robert Barro Robert Barro (born 1944) is an influential macroeconomist and the Wesley Clair Mitchell Professor of Economics at Columbia University. ...


Unsatisfied with Solow's explanation, economists worked to "endogenize" technology in the 1980s. They developed the endogenous growth theory that includes a mathematical explanation of technological advancement.[5][6] This model also incorporated a new concept of human capital, the skills and knowledge that make workers productive. Unlike physical capital, human capital has increasing rates of return. Therefore, overall there are constant returns to capital, and economies never reach a steady state. Growth does not slow as capital accumulates, but the rate of growth depends on the types of capital a country invests in. Research done in this area has focused on what increases human capital (e.g. education) or technological change (e.g. innovation).[4] In economics, endogenous growth theory or new growth theory was developed in the 1980s as a response to criticism of the neo-classical growth model. ... Human capital refers to the stock of productive skills and technical knowledge embodied in labor. ... به خاطر اعمال تخریبی یک کاربر مشخص AOL، ویکی‌پدیا معمولاً proxyهای AOL را می‌بندد. متأسفانه ممکن است تعداد زیادی از کاربران AOL از یک خادم proxy واحد استفاده کنند، و در نتیجه کاربران بی‌تقصیر AOL معمولاً ندانسته بسته می‌شوند. از دردسر ایجاد شده عذر می‌خواهیم. اگر این اتفاق برای شما افتاد، لطفاً به یکی از مدیران از یک نشانی پست الکترونیک AOL پیغام بفرستید. حتماً نشانی IPی را در فوق داده شده ذکر کنید. بازگشت به صفحهٔ اصلی. گرفته شده از «http://fa. ...


Other theories

Theories of economic growth, the mechanisms that let it take place and its main determinants abound. One popular theory in the 70's for example was that of the "Big Push" which suggested that countries needed to jump from one stage of development to another through a virtuous cycle in which large investments in infrastructure and education coupled to private investment would move the economy to a more productive stage, breaking free from economic paradigms appropriate to a lower productivity stage. [7] The Big Push Model is a concept in development economics or welfare economics that emphasizes the fact that a firms decision whether to industrialize or not depends on the expectation of what other firms will do. ...


Analysis of recent economies' success shows a close correlation between growth and climate. It is possible that there is absolutely no actual mechanism between the two, and the relation may be spurious. In early human history, economic as well as cultural development was concentrated in warmer parts of the world, like Egypt. In statistics, a spurious relationship (or, sometimes, spurious correlation) is a mathematical relationship in which two occurrences have no causal connection, yet it may be inferred that they do, due to a certain third, unseen factor (referred to as a confounding factor or lurking variable). The spurious relationship gives an...


According to Acemoglu, Johnson and Robinson, the positive correlation between high income and cold climate is a by-product of history. Former colonies have inherited corrupt governments and geo-political boundaries (set by the colonizers) that are not properly placed regarding the geographical locations of different ethnic groups; this creates internal disputes and conflicts. Also, these authors contend that the egalitarian societies that emerged in colonies without solid native populations, and which could be exploited by individual farmers led to better property rights and incentives for long-term investment than those where native population was large, and together with the tropical climate, colonizers were led to plunder and run, and to create exploitative institutions, a situation which did not foster growth or private property rights. Colonies in temperate climate zones as Australia and USA did not inherit exploitative governments since Europeans were able to inhabit these territories and set up governments that mirrored those in Europe. It is important to note that Sachs, among others, do not believe this to be the case.


Criticism

  • Arguments against economic growth

Four major critical arguments are generally raised against economic growth:[8]

  1. Growth has negative effects on the quality of life: Many things that affect the quality of life, such as the environment, are not traded or measured in the market, and they can lose value when growth occurs.
  2. Growth encourages the creation of artificial needs: Industry cause consumers to develop new tastes, and preferences for growth to occur. Consequently, "wants are created, and consumers have become the servants, instead of the masters, of the economy."[8]
  3. Resources: The 2007 United Nations GEO-4 report warns that we are living far beyond our means. The human population is now so large that the amount of resources needed to sustain it exceeds what is available. Humanity’s environmental demand is 21.9 hectares per person while the Earth’s biological capacity is, on average, only 15.7 ha/person.[9] This report supports the basic arguments and obsevations made by Thomas Malthus in the early 1800s, that is, economic growth depletes non-renewable resources rapidly.[10]
  4. Distribution of income: The gap between the richest in the world and the poorest is growing.[11]

Other intellectuals report that the narrow view of economic growth, combined with globalisation, is creating a scenario where we could see a systemic collapse of our planet's natural resources.[citation needed] This article is about the economic and philosophical concept. ... Thomas Robert Malthus FRS (13 February 1766 – 23 December 1834),[1] was a political economist and British demographer. ...


There are concerns with the environmental and ecological effects of economic growth, especially relating to growth in mining, forestry, agricultural and industrial activities. Many researchers feel these sustained environmental effects can have an effect on the whole ecosystem. They claim the accumulated effects on the ecosystem put a theoretical limit on growth of these activities. Some draw on archaeology to cite examples of cultures they claim have disappeared because they grew beyond the ability of their ecosystems to support them. The claim is that the limits to growth will eventually make growth in resource consumption impossible. For the journal, see Ecology (journal). ... A coral reef near the Hawaiian islands is an example of a complex marine ecosystem. ... For referencing in Wikipedia, see Wikipedia:Citing sources. ...


The rate or type of economic growth may have important consequences for the environment (the climate and natural capital of ecologies). Concerns about possible negative effects of growth on the environment and society led some to advocate lower levels of growth, from which comes the idea of uneconomic growth, and Green parties which argue that economies are part of a global society and a global ecology and cannot outstrip their natural growth without damaging them. Natural capital, as described in the book Natural Capitalism, is a metaphor for the mineral, plant, and animal formations of the Earths biosphere when viewed as a means of production of oxygen, water filter, erosion preventer, or provider of other ecosystem services. ... Uneconomic growth, in welfare economics, human development theory and some forms of ecological economics, is economic growth which reflects or creates a decline in human well-being. ... This article is about the green parties around the world. ...

  • Arguments supporting economic growth

Supporters argue that global income inequality is in fact diminishing,[12] and that the rapid reduction in global poverty is in large part due to economic growth, according to World Bank.[13] The decline in poverty has been the slowest where growth performance has been the worst (ie. in Africa).[14] Happiness increases with a higher GDP/capita, at least up to a level of $15,000 per person.[15] Many earlier predictions of resource depletion, such as Thomas Malthus (1798) predictions about this inevitable causing continuing famines in Europe, [4] The Population Bomb (1968), [5] [6] [7] Limits to Growth (1972), [8] [9] [10] and the Simon-Ehrlich wager (1980) [11] have, according to critics, been proved false, one reason being that advancements in technology and science have continually allowed previously unavailable resources to be utilized economically. [12] The book The Improving State of the World argues that the state of humanity is rapidly improving. Kuznets curve is the graphical representation of Simon Kuznetss theory (Kuznets hypothesis) that economic inequality increases over time, then at a critical point begins to decrease. ... World Bank Group logo The World Bank Group (WBG) is a family of five international organizations responsible for providing finance and advice to countries for the purposes of economic development and eliminating poverty. ... Thomas Robert Malthus FRS (13 February 1766 – 23 December 1834),[1] was a political economist and British demographer. ... The Population Bomb (1968) is a book written by Paul R. Ehrlich. ... Limits to Growth was a 1972 book modeling the consequences of a rapidly growing world population and finite resource supplies, commissioned by the Club of Rome. ... Julian L. Simon and Paul Ehrlich entered in a famous wager in 1980, betting on a mutually agreed upon measure of resource scarcity over the decade leading up to 1990. ... The Improving State of the World: Why Were Living Longer, Healthier, More Comfortable Lives On a Cleaner Planet is a 2007 book by Indur M. Goklany. ...


The Austrian School argue that the concept of "growth" or the creation and acquisition of more goods and services is dependent upon the relative desires of the individual. Someone may prefer having more leisure time to acquiring more goods and services. Also, they claim that the notion of growth implies the need for a "central planner" within an economy. To Austrian economists, such an ideal is antithetical to the concept of a free market economy, without the presence of governmental intervention. As such, Austrian economists believe that the individual should determine how much "growth" s/he desires.[16] The Austrian School, also known as the “Vienna School” or the “Psychological School”, is a heterodox school of economic thought that advocates adherence to strict methodological individualism. ... A good or commodity in economics is any object or service that increases utility, directly or indirectly, not to be confused with good in a moral or ethical sense (see Utilitarianism and consequentialist ethical theory). ... This article is about a term used in economics. ... Kinship is a biological and/or familial relationship between two organisms. ... A relaxing afternoon of leisure: a young girl resting in a pool. ... A market economy (also called a free market economy or a free enterprise economy) is an economic system in which the production and distribution of goods and services take place through the mechanism of free markets (though completley useless to some dumbasses) guided by a free price system. ... For the government in parliamentary systems, see Executive (government) A government is a body that has the power to make and the authority to enforce rules and laws within a civil, corporate, religious, academic, or other organization or group . ... As commonly used, individual refers to a person or to any specific object in a collection. ...


Most growth in economic activity necessitates some growth in consumption of resources - for instance, it is impossible to produce goods without resource and energy inputs, and it is impossible to have the economy running without the further input of energy to transport people and goods. Steady growth is, by its nature, an exponential function. A quantity that grows according to an exponential function exhibits a doubling in size at a regular time interval (called the doubling time). If the rate of consumption of a non-renewable resource is growing steadily (for instance, 5% per year), then that rate will double regularly. At 5% growth per year, in approximately 14 years the consumption rate will have doubled. After another 14 years the rate will have quadrupled. After a century of 5% annual growth, the resource will be consumed at a rate 130 times the original rate. The exponential function is one of the most important functions in mathematics. ... The doubling time is the period of time required for a quantity to double in size or value. ...


Those more optimistic about the environmental impacts of growth believe that, although localized environmental effects may occur, large scale ecological effects are minor. The optimists claim that if these global-scale ecological effects exist, human ingenuity will find ways of adapting to them.[citation needed]


Canadian scientist, David Suzuki stated in the 1990s that ecologies can only sustain typically about 1.5-3% new growth per year, and thus any requirement for greater returns from agriculture or forestry will necessarily cannibalize the natural capital of soil or forest.[citation needed] Some think this argument can be applied even to more developed economies.[citation needed] David Takayoshi Suzuki, CC, OBC, Ph. ... For the band, see 1990s (band). ... A decidous beech forest in Slovenia. ... Natural capital, as described in the book Natural Capitalism, is a metaphor for the mineral, plant, and animal formations of the Earths biosphere when viewed as a means of production of oxygen, water filter, erosion preventer, or provider of other ecosystem services. ... Loess field in Germany Surface-water-gley developed in glacial till, Northern Ireland For other uses, see Soil (disambiguation). ... This article is about a community of trees. ...


Mainstream economists would argue that economies are driven by new technology and ongoing improvements in efficiency — for instance, we have faster computers today than a year ago, but not necessarily computers requiring more natural resources to build. Also, physical limits may be very large if considering all the minerals in the planet Earth or all possible resources from space colonization, such as solar power satellites, asteroid mining, or a Dyson sphere. The book Mining the Sky: Untold Riches from the Asteroids, Comets, and Planets is one example of such arguments. However, depletion and declining production from old resources can sometimes occur before new resources are ready to replace them. This is, in part, the logical basis of the Peak Oil phenomenon. Artists conception of a space habitat called the Stanford torus, by Don Davis Space colonization (also called space settlement, space humanization, space habitation, etc. ... An artists depiction of a solar satellite, which could send energy wirelessly to a space vessel or planetary surface. ... 433 Eros is a stony asteroid in a near-Earth orbit Raw resources and minerals could be mined from an asteroid in space using a variety of methods. ... A cut-away diagram of an idealized Dyson shell—a variant on Dysons original concept—1 AU in radius. ... Mining the Sky: Untold Riches from the Asteroids, Comets, and Planets by John S. Lewis is a book on Space industrialization. ... For other uses, see Peak oil (disambiguation). ...


Implications of climate change

see Economics of global warming

The predicted rate of economic growth has important implications for climate change policy with regards to a reduction in economic growth due to a reduction in greenhouse gas emissions, versus the economic threat of climate change in the next 100 years. As recent estimates of the rate of global warming have increased, so have the financial estimates of the damage costs. ... Top: Increasing atmospheric levels as measured in the atmosphere and ice cores. ... Variations in CO2, temperature and dust from the Vostok ice core over the last 450,000 years For current global climate change, see Global warming. ...


Some insurance industry analysts claim that the rate of increase in property destruction due to the effects of climate change are projected to exceed the world's total economic output by 2065.[17]


The Stern Review, published by the United Kingdom Government in 2006, concluded that an investment of 1% of GDP per annum would be sufficient to avoid the worst effects of climate change, and that failure to do so could risk global GDP being 20% lower than it otherwise might be. Sir Nicholas Stern, author of the report. ...


On the other hand, if economic growth is sustained over the long term, future generations may be so wealthy that they will have nothing to fear. Lord Lawson claimed that people in a hundred years time would be "seven times as well off as we are today", therefore it is not reasonable to impose sacrifices on the "much poorer present generation".[18] The Right Honourable Nigel Lawson, Baron Lawson of Blaby, PC (born March 11, 1932), a British politician, was Chancellor of the Exchequer between June 1983 and October 1989. ...


See also

In economics, the term boom and bust refers to the movement of an economy through economic cycles. ... Most generally, the accumulation of capital refers simply to the gathering or amassment of objects of value; the increase in wealth; or the creation of wealth. ... Capital formation is a term used in national accounts statistics and macroeconomics. ... This article does not cite any references or sources. ... Ecological economics is a transdisciplinary field of academic research that addresses the dynamic and spatial interdependence between human economies and natural ecosystems. ... When Karl Marx and Friedrich Engels created the ideology of Communism, many Marxists believe they inductively surmised what they saw as a law of history, an inexorable law, that ran throughout the course of history. ... Economic development is the development of economic wealth of countries or regions for the well-being of their inhabitants. ... Gross fixed capital formation (GFCF) is a macroeconomic concept used in official national accounts since the 1930s. ... Gross Output is an economic concept used in national accounts such as the United Nations System of National Accounts (UNSNA) and the US National Income and Product Accounts (NIPA). ... Growth accounting is a set of theories used in economics to explain economic growth. ... Human development theory is an economic theory that merges older ideas from ecological economics, sustainable development, welfare economics, and feminist economics. ... The Incremental Capital-Output Ratio (ICOR), is the ratio of investment to growth which equals to 1 divided by the marginal product of capital. ... The government determines the value of the index of leading economic indicators from the values of ten key variables. ... Invest redirects here. ... Please wikify (format) this article or section as suggested in the Guide to layout and the Manual of Style. ... Limits to Growth was a 1972 book modeling the consequences of a rapidly growing world population and finite resource supplies, commissioned by the Club of Rome. ... The Club of Rome is a global think tank that deals with a variety of international political issues. ... World map showing GDP real growth rates for 2007. ... Measures of national income and output are used in economics to estimate the value of goods and services produced in an economy. ... Net output is an accounting concept used in national accounts such as the United Nations System of National Accounts (UNSNA) and the NIPAs, and sometimes in corporate or government accounts. ... For other uses, see Peak oil (disambiguation). ... Stagflation, a portmanteau of the words stagnation and inflation, is a term in general use within modern macroeconomics used to describe a period of out-of-control price inflation combined with slow-to-no output growth, rising unemployment, and eventually recession. ... The Earth Day flag includes a NASA photo. ... Uneconomic growth, in welfare economics, human development theory and some forms of ecological economics, is economic growth which reflects or creates a decline in human well-being. ...

Prominent growth economists

Joseph Alois Schumpeter (February 8, 1883 – January 8, 1950) was economist and political scientist born in Moravia. ... Sir Roy Forbes Harrod was an English economist. ... Evsey Domar (1914-1997) was a Polish-American economist, famous as co-author of the Harrod-Domar model. ... Nicholas Kaldor, Baron Kaldor (Budapest, 12 May 1908 - Papworth Everard, Cambridgeshire, 30 September 1986) was one of the foremost Cambridge economists in the post-war period. ... Robert Merton Bob Solow (born August 23, 1924) is an American economist particularly known for his work on the theory of economic growth. ... Paul Michael Romer is an economist and professor at Stanford University. ... Robert Emerson Bob Lucas, Jr. ... Robert Barro. ... Daron Acemoglu (Turkish: Daron Acemoğlu), born on September 3, 1967 in Istanbul, Turkey is an Turkish-American economist. ...

References

  1. ^ Ibn Khaldun, Muqaddimah, 2:272-73, quoted in Dieter Weiss (1995), "Ibn Khaldun on Economic Transformation", International Journal of Middle East Studies 27 (1), p. 29-37 [30].
  2. ^ Robert M. Solow (1956), "A Contribution to the Theory of Economic Growth," Quarterly Journal of Economics, 70(1), pp. 65-94.
  3. ^ Trevor W. Swan (1956). "Economic Growth and Capital Accumulation', Economic Record, 32, pp. 334–61.
  4. ^ a b Elhanah Helpman, The Mystery of Economic Growth, Harvard University Press, 2004.
  5. ^ Romer, 1986
  6. ^ Lucas, 1988
  7. ^ Paul Rosenstein-Rodan
  8. ^ a b Case, K.E., and Fair, R.C. 2006. Principles of Macroeconomics. Prentice Hall. ISBN-10: 0132226456, ISBN-13: 978-0132226455.
  9. ^ UNEP’s Global Environment Outlook: environment for development (GEO-4 2007) report. [1]
  10. ^ Meadows, D.L., Meadows, D.L., and Randers, J. (1973) The Limits to Growth Washington, DC: Potomac Associates.
  11. ^ Pritchett, Lant. "Divergence, Big Time." Journal of Economic Perspectives Summer 1997 [2]
  12. ^ Global Inequality Fades as the Global Economy Grows Xavier Sala-i-Martin. 2007 Index of Economic Freedom.
  13. ^ Poverty, Growth, and Inequality World Bank
  14. ^ Fischer, Stanley. "Globalization and Its Challenges." American Economic Review May 2003, p.13.
  15. ^ In Pursuit of Happiness Research. Is It Reliable? What Does It Imply for Policy? The Cato institute. April 11, 2007
  16. ^ Man, Economy and State [3], Austrian economist Murray Rothbard
  17. ^ McCarthy, Michael. "'Climate change will bankrupt the world'", The Independent, 24 November 2000. Retrieved on 2007-11-29. 
  18. ^ Examination of Witnesses (Questions 32-39) (16 May 2007). Retrieved on 2007-11-29.

Ibn Khaldūn or Ibn Khaldoun (full name, Arabic: , ) (May 27, 1332 AD/732 AH – March 19, 1406 AD/808 AH), was a famous Berber Muslim polymath: a historian, historiographer, demographer, economist, philosopher, political theorist, sociologist and social scientist born in present-day Tunisia. ... The Muqaddimah, or the Muqaddimah of Ibn Khaldun (Arabic: مقدّمة ابن خلدون), records an early Muslim view of universal history. Many modern thinkers view it as one of the first works of sociology. ... Paul Rosenstein-Rodan (1902-1985) was a Austrian economist born in Kraków, who was trained in the Austrian tradition at Vienna. ... Xavier Sala i Martín (b. ... Map of Economic Freedom released by the Heritage Foundation. ... Man, Economy, and State is a treatise on economic principles by Murray Rothbard, and is one of the most important books in the Austrian School of economics (others are Ludwig von Mises The Theory of Money and Credit and Human Action) When originally published in 1962, the final eight chapters... Murray Newton Rothbard (March 2, 1926 – January 7, 1995) was an influential American economist, historian and natural law theorist belonging to the Austrian School of Economics who helped define modern libertarianism. ... is the 328th day of the year (329th in leap years) in the Gregorian calendar. ... Year 2000 (MM) was a leap year starting on Saturday. ... Year 2007 (MMVII) was a common year starting on Monday of the Gregorian calendar in the 21st century. ... is the 333rd day of the year (334th in leap years) in the Gregorian calendar. ... is the 136th day of the year (137th in leap years) in the Gregorian calendar. ... Year 2007 (MMVII) was a common year starting on Monday of the Gregorian calendar in the 21st century. ... Year 2007 (MMVII) was a common year starting on Monday of the Gregorian calendar in the 21st century. ... is the 333rd day of the year (334th in leap years) in the Gregorian calendar. ...

Further reading

  • Barro, Robert J. 1997. Determinants of Economic Growth: A Cross-Country Empirical Study. MIT Press: Cambridge, MA.
  • Erber, Georg, and Harald Hagemann, Growth, Structural Change, and Employment, in: Frontiers of Economics, Ed. Klaus F. Zimmermann, Springer-Verlag, Berlin – Heidelberg – New York, 2002, 269-310.
  • Foley, Duncan K. 1999. Growth and Distribution. Harvard University Press: Cambridge, MA.
  • Garrison, Roger. 1998 Time and Money
  • Hamilton, Clive 2002. Growth Fetish.
  • Jones, Charles I. 2002. Introduction to Economic Growth. 2nd ed. W. W. Norton & Company: New York, N.Y.
  • Kirzner, Israel. 1973. Competition and Entrepreneurship
  • Lucas, Robert E., Jr., "The Industrial Revolution: Past and Future," Federal Reserve Bank of Minneapolis, Annual Report (2003) online edition
  • Mises, Ludwig E. 1949 Human Action 1998 reprint by the Mises Institute
  • Schumpeter, Jospeph A. 1912. The Theory of Economic Development 1982 reprint, Transaction Publishers
  • Schumpeter, Jospeph A. 1942. Capitalism, Socialism, and Democracy Harper Perennial
  • Weil, David N. 2008. Economic Growth. 2nd ed. Addison Wesley.

Growth Fetish is a book (ISBN 1741140781) about economics and politics by the Australian left-wing political theorist Clive Hamilton. ... Robert Emerson Bob Lucas, Jr. ...

External links

Articles and lectures

Paul Michael Romer is an economist and professor at Stanford University. ... Scientific American is a popular-science magazine, published (first weekly and later monthly) since August 28, 1845, making it the oldest continuously published magazine in the United States. ... Economics is the social science studying production and consumption through measurable variables. ...

Data

  • Historical data - since 1954 - comparing the US GDP growth rate versus the US Fed Funds Rate
  • Angus Maddison's Historical Dataseries -Series for almost all countries on GDP, Population and GDP per capita from the year 0 up to 2003

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