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Economic Growth and Development

Ignacio Hernandez's picture

The Federal Reserve Bank of Philadelphia organized last Friday a policy forum on "Economic Growth and Development: Perspectives for Policymakers".  Most of the background papers are available on the website.

 

One of the speakers was Xavier Sala-i-Martin. This is his paper on World Distribution of Income. His fun website is well worth a visit. Much more than economics in there ...

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Submitted by Dr. Sidney O. Okolo on
From the desk of Dr. Sidney O. Okolo, Professor, Business Consultant/Strategist, and Expert in Africa. Economic Growth and Development: I am more interested in how people in developing countries living under abject poverty can be elevated to a high standard of living. These poor people need to be taught how to read, comprehend, interpret, and apply the common and easy to read manual that will help them in the development of themselves. Using quantitative approach to explain the economic growth and development may be good for the scholars and educated members of the society who know what the formula and equations mean and stand for, but to a lay, less educated, and poor man or woman living in the rural areas of developing countries that will not make any sense to him or her. The use of qualitative approach will be easy to read and comprehend by such citizens and that will also enhance in their interest to explore further due to the simplicity of the manual. The people that are being targeted for economic development are the poor and they are the individuals who will use the economic growth and development manual. Organizations may do all they can but at the end it is these poor people who will the manual and they are also the people to apply the concepts. Economic growth is said to be present when living standard is raised from one population generation to another. Economic growth is simply explained as an increase in the real gross domestic product (GDP). When a country produces more goods and services, its real gross domestic product increases and that leads to its citizens to have the ability to consume more of those goods and services. Irrespective of how economic growth is defined, the fact remains that if income is not distributed among the population, the poor will get poorer and the rich will get richer. Therefore, increase in gross domestic product (GDP) or per capita real gross domestic product does not translate income distribution or quality of life. That is why a manual targeting the poor should be made simple in order to help them take care of their future and elevate them to a higher standard of living. When the population divides what is produced it gives us per capita real gross domestic product, and that too does not help the poor. The four factors that determine the economic growth are labor, capital, land, and technology. Developing countries have more labor force with lower wages than developed countries and yet their economic growth is still lower than that of the developed countries. Capital is another problem facing developing countries. They need resources such as equipments, machines, factories, and money to work with. Labor without capital is synonymous to guns without bullets. Capital will also represent an investment that will pay off in the future. Most developing countries have untapped resources such as oil, gold, diamond, minerals, forests, and water that represent land which by themselves cannot stimulate economic growth unless they are exploited and converted to goods and services. Technology enhances Economic Growth. A group of agricultural researchers from Texas A&M University and University of California-Davis acquired a four-year grand of $4.4 million from U.S Agency for International Development's Mission to Afghanistan "to provide early warning systems about animal health and to help pinpoint the location of the healthiest grazing areas". This discovery will aid the livestock herders to successfully tend to cattle, sheep, horses and goats. If this system had been in place, it may have made an impact during the tsunami in Indonesia. Political and social factors that inhibit Economic Growth are corruption, instability, lack of leadership and administrative skills, population growth, and lack of business enterprises. Strategies need to be designed/developed and implemented in order to help the less educated and poor people who are not fortunate enough to come from the higher income spectrum, and help elevate them to a higher standard of living. Dr. Sidney O. Okolo, PhD. Organization & Management Professor, Business consultant/Strategist, Expert in Africa Grand Canyon University International Business Associates, Inc. chicagoassets@netzero.net sokolo@my.gcu.edu Phone: (312) 671-4721 Fax: (708) 891-4721

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