ECONOMIC GROWTH

Economic Growth

Economic Growth

1) a) Select one of the countries in the Excel file and using the data provided calculate the following for the country you have chosen:

We have selected United States of America, which is one of the largest and strongest economies of the world, for our analysis of economic growth.

 

Population(000s)

GDP Deflator

Nominal GDP (millions)

Country

United States

United States

United States

1970

1,024,800.0

24.322

1,024,800.0

1971

1,113,100.0

25.535

1,113,100.0

1972

1,225,000.0

26.632

1,225,000.0

1973

1,369,300.0

28.107

1,369,300.0

1974

1,485,900.0

30.660

1,485,900.0

1975

1,623,400.0

33.563

1,623,400.0

1976

1,809,100.0

35.480

1,809,100.0

1977

2,013,600.0

37.740

2,013,600.0

1978

2,276,000.0

40.385

2,276,000.0

1979

2,543,500.0

43.755

2,543,500.0

1980

2,767,500.0

47.745

2,767,500.0

1981

3,103,800.0

52.220

3,103,800.0

1982

3,227,700.0

55.402

3,227,700.0

1983

3,506,900.0

57.593

3,506,900.0

1984

3,900,400.0

59.756

3,900,400.0

1985

4,184,800.0

61.581

4,184,800.0

1986

4,425,000.0

62.958

4,425,000.0

1987

4,699,000.0

64.804

4,699,000.0

1988

5,060,700.0

67.043

5,060,700.0

1989

5,439,600.0

69.582

5,439,600.0

1990

5,754,800.0

72.273

5,754,800.0

1991

5,943,200.0

74.834

5,943,200.0

1992

6,291,500.0

76.612

6,291,500.0

1993

6,614,300.0

78.293

6,614,300.0

1994

7,030,500.0

79.931

7,030,500.0

1995

7,359,300.0

81.590

7,359,300.0

1996

7,783,900.0

83.149

7,783,900.0

1997

8,278,900.0

84.624

8,278,900.0

1998

8,741,000.0

85.580

8,741,000.0

1999

9,301,000.0

86.835

9,301,000.0

2000

9,898,800.0

88.714

9,898,800.0

2001

10,233,900.0

90.725

10,233,900.0

2002

10,590,200.0

92.199

10,590,200.0

2003

11,089,300.0

94.141

11,089,300.0

2004

11,797,800.0

96.787

11,797,800.0

2005

12,564,300.0

100.000

12,564,300.0

2006

13,314,500.0

103.226

13,314,500.0

2007

13,961,800.0

106.219

13,961,800.0

2008

14,219,300.0

108.567

14,219,300.0

2009

13,863,600.0

109.722

13,863,600.0

i) Real GDP (in millions of national currency)

ii) Real GDP per capita (in terms of national currency per person)

iii) The annual percentage growth rates of (total) real GDP and real GDP per capita

Country

United States

United States

United States

United States

United States

United States

United States

 

Nominal GDP

GDP deflator

Population

Real GDP

Real GDP per capita

Growth in real GDP

Growth in GDP per capita

1970

1,024,800

24.322

205,052

4,213,400

20.5479385

3.458014905

2.158441939

1971

1,113,100

25.535

207,661

4,359,100

20.9914538

5.521782019

4.398021493

1972

1,225,000

26.632

209,896

4,599,800

21.9146625

5.911126571

4.9051376

1973

1,369,300

28.107

211,909

4,871,700

22.9896068

-0.519325903

-1.42414858

1974

1,485,900

30.660

213,854

4,846,400

22.6622007

-0.196021789

-1.17537743

1975

1,623,400

33.563

215,973

4,836,900

22.3958343

5.41875995

4.421794859

1976

1,809,100

35.480

218,035

5,099,000

23.3861321

4.638164346

3.590924652

1977

2,013,600

37.740

220,239

5,335,500

24.2259105

5.626464249

4.513607687

1978

2,276,000

40.385

222,585

5,635,700

25.3193731

3.147789982

2.015277384

1979

2,543,500

43.755

225,056

5,813,100

25.8296287

-0.287282173

-1.23918937

1980

2,767,500

47.745

227,225

5,796,400

25.5095507

2.541232489

1.539797843

1981

3,103,800

52.220

229,466

5,943,700

25.9023462

-1.980247994

-2.91058402

1982

3,227,700

55.402

231,665

5,826,000

25.1484366

4.515962925

3.564870881

1983

3,506,900

57.593

233,792

6,089,100

26.0449459

7.194823537

6.270763539

1984

3,900,400

59.756

235,825

6,527,200

27.6781629

4.112023532

3.193575163

1985

4,184,800

61.581

237,924

6,795,600

28.5620858

3.427217611

2.475740049

1986

4,425,000

62.958

240,133

7,028,500

29.2692088

3.167105357

2.249076181

1987

4,699,000

64.804

242,289

7,251,100

29.9274956

4.100067576

3.159075755

1988

5,060,700

67.043

244,499

7,548,400

30.8729279

3.564993906

2.591441205

1989

5,439,600

69.582

246,819

7,817,500

31.6729817

1.856092101

0.712111103

1990

5,754,800

72.273

249,623

7,962,600

31.8985285

-0.261221209

-1.58516619

1991

5,943,200

74.834

252,981

7,941,800

31.3928838

3.4047697

1.980442809

1992

6,291,500

76.612

256,514

8,212,200

32.0146019

2.872555466

1.525136206

1993

6,614,300

78.293

259,919

8,448,100

32.5028682

4.114534629

2.845498543

1994

7,030,500

79.931

263,126

8,795,700

33.4277368

2.548972794

1.33484543

1995

7,359,300

81.590

266,278

9,019,900

33.8739455

3.786073016

2.585650346

1996

7,783,900

83.149

269,394

9,361,400

34.7498073

4.505736321

3.259012599

1997

8,278,900

84.624

272,647

9,783,200

35.8823078

4.401422847

3.187606401

1998

8,741,000

85.580

275,854

10,213,800

37.0260946

4.868902857

3.671502585

1999

9,301,000

86.835

279,040

10,711,100

38.3855086

4.173240844

3.019295604

2000

9,898,800

88.714

282,166

11,158,100

39.5444806

1.093376112

0.070595919

2001

10,233,900

90.725

285,050

11,280,100

39.5723974

1.827997979

0.873967405

2002

10,590,200

92.199

287,746

11,486,300

39.9182472

2.552606148

1.670541092

2003

11,089,300

94.141

290,242

11,779,500

40.585098

3.479774184

2.528082468

2004

11,797,800

96.787

292,936

12,189,400

41.6111227

3.075623082

2.140329617

2005

12,564,300

100.000

295,619

12,564,300

42.5017379

2.659121479

1.691359644

2006

13,314,500

103.226

298,432

12,898,400

43.2205951

1.907213298

0.905769391

2007

13,961,800

106.219

301,394

13,144,400

43.612074

-0.359088281

-1.27099157

2008

14,219,300

108.567

304,177

13,097,200

43.0577683

-3.527471521

-4.30732098

2009

13,863,600

109.722

306,656

12,635,200

41.203132

 

 

b) Using your answers to part (a) above, briefly describe the patterns of economic growth experienced by the country you have selected. You should include in your answer any graphs or tables that you feel are relevant.

Economic growth means an increase in economic activity compared to an earlier point for example previous year. The most commonly used indicator is the percentage increase in the gross national product (GNP) or gross domestic product (GDP) per capita over a given period (month, quarter or year).

Economic growth is usually measured over a whole country. This is adjusted for inflation, so there is real growth. If not corrected for inflation, there is nominal growth. Also this does not necessarily mean that the purchasing power of the population is growing because the population may increase or decrease (Lucas, Robert, 1988, pp. 3-4).

Contrary to the economic growth is economic contraction usually referred to as a negative growth? It shows the activity of a decrease in growth as compared to previous year.

The volatility of economic growth is also referred as cyclical conditions with stronger growth (boom), alternating with periods of slower (recession) or even negative growth (crisis).

If economic growth is measured as the annual percentage change of GDP, it can be either positive or negative. Real GDP gives a better indicator of the situation as the Real GDP of the country may be misleading as the increase in prices could also lead to an increase in GDP.

Until the early seventies they had eyes only for the benefits of economic growth. All countries strove the growth rate of their economy afloat. In recent decades, however, came to the conclusion that economic growth also many disadvantages links. Even Real GDP, may give wrong conclusions. If the population is increasing by higher percentage than the Real GDP of the country, it means the purchasing power of the country is not improving as Real GDP is adjusted for inflation.

Real GDP of the country has been increasing since 1970 and most of the times; it is associated with rapid growth and development in the country in most cases. However in the beginning of 1980s, Real GDP saw a little decline due to a sharp increase in the inflation. The picture gets more clear if we analyze the GDP per capita of the country, showing the purchasing ...