Macroeconomic Objectives Of Economic Growth

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Economic growth may be considered as one of the macroeconomic objectives for a country. For the purposes of this essay, economic growth can be defined as an increase in ability and capacity of a country to produce goods and services compared to another period of time. Economic growth can be measured by the overall level of gross domestic product of a country (GDP per capita). Gross Domestic Product (GDP) is an estimate of total market output and national income, which adds up the value of all final goods in a given period of time (Costanza et al., 2009). It is typically represented by the equation GDP= C(consumption)+I(investment)+G(government spending)+(X-M(the value of exports subtracted from value of imports)). Generally, it is believed …show more content…
For the purposes of this essay economic development can be defined as improvement in welfare represented in reducing widespread poverty, raising living standards, increasing employment opportunities and reducing of income inequalities. Economic development may be measured by a number of indicators: HDI (human development index) life expectancy, literacy rate, poverty, infant mortality rate and environmental factors. This essay will argue that a country should pursue economic growth to the extent in which a balance between economic growth and economic development (ie.human development) is formulated. It will propose that economic growth should be pursued as a means of achieving economic development for the population through the consideration of some of the costs and benefits of economic growth including environmental degradation, wealth inequality,decreased unemployment ratio. These costs and benefits can be further examined by looking at both real GDP per capita and economic development indicators in both MEDC’s and …show more content…
This theory was developed by Kuznets, where he argued that the relationship between economic growth and environmental sustainability may formulate an inverted U-shaped line, where at first, the environmental degradation increases as the country pursues economic growth, up until a turning point where there would be a transition of the policies, which would allow the decline of environmental overexploitation. In such a case, it can be argued that economic growth in the long term would lead to better opportunities for environmental sustainability due to the increased technology and more available budgets for development of sustainable strategies, such as solar power, e-cars development of infrastructure for sustainable and efficient public transportation (Dinda,2004). This theory is based on the idea that as a country pursues economic growth, people would be satisfied with their standard of living and would be willing to care more about the environment by having more policies for environmental protection. Looking at this argument from a perspective of MEDC’s and LEDC’s it can be seen that more developed countries would have more responsibility over environment, as they already have an established

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