Revision
Key Concepts
Modern Economic Growth
Modern Economic growth is defined as a sustained increase in per capita product, usually accompanied by an increase in population and significant structural changes.
To be specific, it is a long-term rise in capacity of an economy to produce goods and services, associated with technological changes and industrialisation.
It improves to be more efficient and specialised which is important cause for mass production.
It is not just productive capacity that contributes to economic growth but an improvement in welfare and development.
Economic growth is usually being measured by a change in the GDP. To determine the change in GDP, the amount of goods produced by a country is compared to consumer, government, and investment spending.
GDP is the market value of all the final goods and services produced within a country given time period.
MEG’s factors which affect the country’s economy expansion are entrepreneurship, discovery of natural resources, human capital, physical capital.
Entrepreneurship creates new jobs and opportunities to the public as well as making earnings in the meanwhile. It would cause industries to be more aggressive, thus simulating economic growth and innovation.
Natural resources can bring profits by selling them to foreign countries or creating capabilities for manufacturing products at a lower price compared to importing of resources.
Human capital is important as the people would assist their country’s economic growth with their skills and expertise in areas like research and development and innovation with regards to production and technology.
More investment on physical capital promotes an increase in production output as well as higher demand and more earnings. However, proper maintenance must be done and sufficient infrastructure support for the physical capital in order for it to continue support the nation in the long run.
There are numerous benefits when the economy...