Economic growth is the process whereby the real national income and real per capita income of a country increases over a long period of time. It has been defined by various eminent economists also. The characteristics of economic growth are:
Economic growth is measured in terms of two national income aggregates, which are national income and per capita income.
Economic growth is increase in income that is corrected for population change, which is depicted by per capita income. So, per capita income is the appropriate indicator of economic growth.
Economic growth is a prolonged and sustained increase in per capita income over a long period of time.
Economic growth does not alter the structure of the economy.
Economic growth involves quantitative changes. It does not take into account qualitative aspects like quality of goods, taste and preferences etc.
There are various indicators of economic growth. The measures of economic growth are:
Increase in gross domestic product (GDP)
Increase in per capita income
Increase in per capita consumption
American economic historian W.W Rostow described transformation of countries from underdeveloped to develop in terms of various stages of growth. The various stages through which an economy progress on the path of development:
Drive to maturity
Age of high mass consumption
This is known as Rostow’s stages of transformation.
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Consider the following statements and identify the Wrong one.Marks:1
Poor countries are not aware of their inferior economic and political status in the world.
Poor countries are aware of their inferior economic and political status in the world. They have realized that it is only through economic development that they can increase their economic power and thereby, achieve recognition in the world.
__________ is the average income of the people of a country in a particular year.Marks:1
Per capita income
Per capita income is the average income of the people of a country in a particular year. It is income per head of population. It is obtained by dividing national income of a country by its population.
___________ is defined as the value of all final goods and services produced in a country in a year.Marks:1
National income is defined as the value of all final goods and services produced in a country in a year.
_____________ won the Noble Prize in economics for his empirical work on economic growth.Marks:1
Simon Kuznets was a Russian American economist at Harvard University, who won the 1971 Nobel Prize in economics for his empirical work on economic growth which has led to a new insight into the process of development.
When real per capita income of a country increases over a long period of time it is known as ______________.Marks:1
When real per capita income of a country increases over a long period of time it is known as economic growth. Economic growth has been defined in terms of national; income aggregates.