Economic growth factors affecting growth and development of a child pdf the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP.
Rate of change of Gross domestic product, world and Organisation for Economic Co-operation and Development, since 1961. Growth is usually calculated in real terms – i.
Measurement of economic growth uses national income accounting. The economic growth rates of nations is commonly compared using the ratio of the GDP to population or per-capita income. The “rate of economic growth” refers to the geometric annual rate of growth in GDP between the first and the last year over a period of time.
Implicitly, this growth rate is the trend in the average level of GDP over the period, which implicitly ignores the fluctuations in the GDP around this trend. GDP and people for the initial and final periods included in the analysis.
In a famous estimate, MIT Professor Robert Solow concluded that technological progress has accounted for 80 percent of the long-term rise in U. Note: There are various measures of productivity.
The term used here applies to a broad measure of productivity. Many of the cited references use TFP. Increases in productivity lower the real cost of goods. Economic growth has traditionally been attributed to the accumulation of human and physical capital and the increase in productivity arising from technological innovation.
Before industrialization technological progress resulted in an increase in the population, which was kept in check by food supply and other resources, which acted to limit per capita income, a condition known as the Malthusian trap. The rapid economic growth that occurred during the Industrial Revolution was remarkable because it was in excess of population growth, providing an escape from the Malthusian trap. Countries that industrialized eventually saw their population growth slow down, a phenomenon known as the demographic transition. The balance of the growth in output has come from using more inputs.
Both of these changes increase output. The increased output included more of the same goods produced previously and new goods and services. During the Industrial Revolution, mechanization began to replace hand methods in manufacturing, and new processes streamlined production of chemicals, iron, steel, and other products. Machine tools made the economical production of metal parts possible, so that parts could be interchangeable.
During the Second Industrial Revolution, a major factor of productivity growth was the substitution of inanimate power for human and animal labor. Also there was a great increase in power as steam powered electricity generation and internal combustion supplanted limited wind and water power.
Since that replacement, the great expansion of total power was driven by continuous improvements in energy conversion efficiency. Other productivity improvements included mechanized agriculture and scientific agriculture including chemical fertilizers and livestock and poultry management, and the Green Revolution. Interchangeable parts made with machine tools powered by electric motors evolved into mass production, which is universally used today. Productivity lowered the cost of most items in terms of work time required to purchase.
Real food prices fell due to improvements in transportation and trade, mechanized agriculture, fertilizers, scientific farming and the Green Revolution. Great sources of productivity improvement in the late 19th century were railroads, steam ships, horse-pulled reapers and combine harvesters, and steam-powered factories. The invention of processes for making cheap steel were important for many forms of mechanization and transportation. By the late 19th century both prices and weekly work hours fell because less labor, materials, and energy were required to produce and transport goods.