Economic growth Flashcards
Definition of economic growth
The continuous growth in the productivity of the economy which results in an increase in natural income or real capita.
What can economic growth be operated by
-the discovery of new resources
-improvements in technology, that allows for greater responsibility
-improvements in labour efficiency
-more efficient use of existing resources
Factors of economic growth
-Technological advancement-innovation lead to improvements in capital equipment
-Rate of investment- the rate of new capital accumulation affects the rate of growth
Technical training-economic growth requires highly trained technologists and experts
Governments expenditure-stimulates economic growth and development by investing in fields which assist future output.
Definition of economic development
Economic development- the advancements and improvements, in a country’s standard of living.
Advantages of economic growth
-the standard of living improves
-unemployment decreases
-investments increase
-social and political stability increases
Disadvantages of economic growth
-the rise of inflation may rise
-rise in importation may create a balance of payments deficit
-overconsumption occurs
-automation and mechanization can replace labour causing unemployment.
Measures of economic growth
-The Human Development Index- measures a country’s average achievements in basic aspects of human development.
-The Human Poverty Index- measures deprivation using the percentage of people expected to due before the age 40.
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Major economic problems of the Caribbean
Economic dualism- the division of the economy into
two sectors, on technologically advanced and technologically backwards.
Problems/negative effects of economic dualism
1.There is distribution in the wage structure of the economy as trade unions force wages in the traditional sector to match modern sector
2. Labour is attracted away from the traditional sector to the highly paid modern sector
Measures to reduce problems of economic dualism
-Reduction in inequalities of opportunities
-Better allocation and utilization of resources in rural areas
-Government policies and programs to decentralize economic activities towards more neglected rural areas.
Definition of Unemployment
Where someone is willing and able to work cannot find a job.
Definition of Underemployment
Where individuals take jobs for which they are overqualified or working less what they should earn.
Types of unemployment include
-Traditional unemployment-workers are out of jobs for a short time, workers of jobs from old to new jobs.
-Seasonal unemployment- unemployment caused by seasonal patterns of work such as agriculture,construction and tourism
-Cyclical unemployment- when there is a downsizing in the business(trade)cycle. Businesses are then unable to provide sufficient job.
Structural unemployment-a mismatching between workers and jobs where workers do not have the right skills.
-Technological unemployment- when a capital intensive production replaces a labour intensive production
Causes of unemployment
-Inadequate skills and knowledge
-Decline in economic activity , including productivity growth
-Change in the composition of the labour force
Measures to reduce unemployment
-Establishing manpower training programmes for people that have left school and adults
-Encouraging self-unemployment and community projects
-Increasing the mobility of labour
-Encouraging the expansion of cottage industries as well as the utilization of local resources.
