r.

ECONOMIC GROWTH AND

2 DIA ELOPMENT There are three main deterthinenta. M de a t tf e l - r - . r .
. i 7 a _ nt 5 of cidor: the growth of its Vitt
e conom ic progreSS.
Learning objectives Growth of the A growing labour supply may enable a communi
ty,
labour force o f goods and servic. and so bring -ahnut aelle
After reading this chapter, you should be able to: possibility frontier. This, i
n turn, can lead to hence a potent.' improvement in social Welfaet:
idoe thfy the main factors influencing the economic growth of itself .1 depend
the Mowing main facto. a country on population, th, international nngration;
fe) the pa.clinifinit,
outhoe the major benefits and costs that result from economic gr, turn.
. describe the key indicators of developing countries (a) The nom., increase 0 p
opulation is determined by die exceee4
. explain the main theories of economic development over the dthth rate If a c
ountry's population is b 1 ' " thr,ednsaernsa,ctuersapleirn o h zse Tir,i popo
u' lltion will eventuaellYwleal tOP rris w e n in:Pnloisj ,. , ;
. appreciate the role of population in economic developm, c p pu anon growt
h rate, though, is influenced by ixotixple,::
social factors such customs, attitudes and beliefs fa.,
. assess the contribution that international trade, investment about marriage
s and and axles, Death rates and birth rates are also influenced by such
factors as the availability of make to economic development. medical facilit
ies, old peoples homes cod ante -natal care, including help and advice
on contraception. ln general, a fast growing population means that younger peop
le form sn increasing proportion of the labour force A younger work-.rce m
ay be presumed
to be more energetic and diligent with a potent', for greater geographical e
nd occupational mobility than an older work -force. A slow -growing popu
lation, on the other hand, tends to lead to a rising proportion of olde
r pen* in the economically
Introduction Economi, h may be defined as an increase in a country's produ
ctive cape, active sector and a rising dependency ratio of the old and ret
ired to the total
identiftable by a sustained rise in real national income over a period of yean
population. country's annual rate of economic growth, then, can best be measu
red by taltia,,, Finally, note that since population growth causes an incr
ease in the number of
nalained (here." in a average percentage increase in national income over a l
ong period of time, say Ikea consumers as well as an expansion of the labo
ur force, the rate of economic growth
year, The figure obtained will estimate of the average annual rand caused by po
pulation growth must exceed the rate of population grmyth if output per ten
be an rapaeity head (and therefore potential social welfare) , to increase
If we denote the rate of growth in the country's productive capacity, assum
ing that the rate of economic growth by g and natural population growth bye,
then, other things being unemployment is roughly the same at the beginning and
end of the period. Dos developed ectual. for an Mcrease Al potential social
welfare, we require that 0>0.
A (-oar, mith haa real Economic growth and economic devekpment arc obviously cl
osely related; forth , purposev of this chapter, however, we draw an import
ant distinction between than ft, International migration is the flow of people
between countries and O largely
roita, A country O enjoying economic development when it is experiencing moon d
etermined by the degree of tnternational labour mobility. Net thmigration wil
l tend
.(eetar. h(gh growth, as defined above, and at the same fime is undergoing maj
or strutsd to add to a country's labour force while nct migration will te
nd to reduce it. Such
changes in ns economy, like a shift from agriculture to manufacturing. With
tbs labour mobility, though, is influenced by PaPalation gra.th, a iaa, thll
eorOo 0 languages, customs and
eapital-laboar rola and distinction in mind, we deal with economic growth in thy
context of a industrilsed thd traditions between countri es, oppottoto-- nro
motion prospects, and joo economy, such as the United Kingdom or the United Stat
es, and mon= perhaps more important, laws governing immigration. development in
the context of a boy developed country Developed eau, , such as Indi or
Nligufilil , The participation rate is the proportion of the economically a
ctive population m general, less developed countries can be identified by th
eir relative poverty. Thell reloce , reaf the total population. A risc in thi
s rate would amoun to an mcrease in the sae of the
notion, interne per have other characteristics which distinguish them from the
developed countriet,Int labour force. The participation rate O determined by the
extent to whtch the
eapita rehmeel.), high low national income per head is their major distinguishin
g feature. different age groups and the sexes in the population are. able by
law, customs,
aad mhieh enjoy( a In the first section of this chapter, we examine the main &t
erm,0 of tradition and trade union regulations and attitudes to partwmateo l
abtyur mark.
relatiaely high mod., economic growth and their policy implications. In the seco
nd section, yve cans. activity. For instance, the equal pay legislation in the
United Kingdom should tend
qfiivyg some of the main problems of less developed countries and the possible
Y.Y 1' alleviating them.