Economic Growth

Economic
Growth
Team Presentation
GROUP NAME : TEAM YOUTH
SL. NAME ID SECTION(BATCH)
1 BUSHRA TABASSUM M22020204506 A (2nd)
2 Md. RAKIB UDDIN M22020204516 A (2nd)
3 SAMIRA AKTER NIPU M22020204527 A (2nd)
4 TAHMINA SULTANA DIPA M22020204531 A (2nd)
5 ROBAIDA KHANAM M22020204533 A (2nd)

What is Economic Growth
Economic growth measured as an increase of people real
income.
The ratio between peoples income and the price of what
they can buy is increasing; goods and services become
more affordable, people become less poor.
An increase in the production f goods and services over a
period of time and it depends on the four factors of
production.
Example: a rise in the labor force, human capital and capital
goods
Growth Accounting
A tool that tells us how changes in real gross

domestic product(GDP) in an economy are due to
changes in available capital, labor, human capital
and technology.
Key factors of growth Accounting
Labor Capital Technology

Labor looks at the number of Adding capital in the Technological progress plays
people employed to identify a economy increase a key role in the economic
growth rate. More worker will productivity. Capital growth of nations.
generate more economic investment is of key Technology can bring many
goods and service. importance to the growth facilities including facilitating
accounting equation. grater outputs with the same
stock of capital goods.
Equation of Economic Growth
GDP Growth = Capital

Growth*(Weight of Capital
Contribution) + Labor
Growth*(Weight of Labor
Contribution) + Technological
Progress
Growth Theory
The growth theory is an approach that focuses on

economic growth and how it occur from within the
country rather than rely on external aid or external
investment on capital.
Three Major Theory of Economics
 Classical Growth Theory

 Neoclassical Growth
Theory
 Endogenous Growth
Theory
Classical Growth Theory
Classical Growth Theory is the view

that real GDP growth is temporary and
That when real GDP per person rises
above the subsistence level, a
population explosion brings real GDP
per person back to the subsistence
level.
Classical Growth Theory
This figure shows the

Classical Growth
Theory
Neoclassical Growth Theory
• Neoclassical Growth Theory is the portion that real
GDP per person grows because technological change
induces a level of saving and investment that makes
capital per hour of labor grow.
• Growth ends only if technological change stops.

Neoclassical Growth theory
This figure shows the

Neoclassical Growth
Theory
The Endogenous Growth Theory
The endogenous growth theory is based on the analysis and

development of internal conditions that favor the economic
development of companies and countries in general .
Assumptions in the Endogenous Growth Theory
1. Economists who believe in the theory emphasize the need for the government
to provide incentives and subsidies for businesses in the private sector. It
motivates businesses to invest in research and development so they can
continue to drive innovation.
2. The government should enact policies that help entrepreneurs, which creates
new businesses and new jobs.
3. There are increasing returns to scale by investing in human capital through

education or training programs. Doing so can improve the quality of labor,
which increases productivity.
“Limitations of the Endogenous Growth Theory”
The exogenous growth theory often draws criticisms
for relying on assumptions that cannot be assessed
accurately, and there is no empirical evidence to
validate the theory. In some endogenous growth
models, some may also argue that the difference
between physical capital and human capital is not
distinct. Others may also argue that the endogenous
growth theory disregards the role of organizations
and places too much weight on human capital
Implications of Endogenous Growth Theory
 The main implication of the exogenous growth theory is that the determining factors
for growth are largely outside of one’s control. For the most part, they cannot be
directed, only reacted to.
 There are increasing returns to scale from capital investment in the “knowledge
industries” of education, health, and telecommunications.
 Private sector investment in R&D is a vital source of technological progress for the
economy
Growth Policy
 A growth policy serves as a
comprehensive plan to guide decisions
about development and public
investments.
 It is implemented through regulatory

tools such as design standards and
financing tools such as development
exactions.
6 Main Policies to Promote Economic Growth
I. Altering the Saving Rate .

II. Reduction in Non-Plan Revenue Expenditure .
III.Policies to Raise the Rate of Productivity Growth .
IV. Technological Progress .
V. Reduction in Government Regulation
VI. Industrial Policy.
Types of Growth Policy
Importance of Economic Growth policy
 Economic growth enables consumers to consume more goods and services

and enjoy better standards of living.
 With higher output and positive economic growth, firms tend to employ
more workers creating more employment.
 Economic growth creates higher tax revenues, and there is less need to
spend money on benefits such as unemployment benefit.
 Higher economic growth leads to higher tax revenues and this enables the
government can spend more on public services, such as health care and
education
 High economic growth leads to increased profitability for firms, enabling
more spending on research and development.
THANK
YOU!

Economic Growth

Uploaded by

Copyright:

Available Formats

Economic Growth

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Economic Growth

Uploaded by

Copyright:

Available Formats

Economic

SL. NAME ID SECTION(BATCH)

1 BUSHRA TABASSUM M22020204506 A (2nd)

2 Md. RAKIB UDDIN M22020204516 A (2nd)

3 SAMIRA AKTER NIPU M22020204527 A (2nd)

4 TAHMINA SULTANA DIPA M22020204531 A (2nd)

5 ROBAIDA KHANAM M22020204533 A (2nd)

A tool that tells us how changes in real gross

Labor Capital Technology

GDP Growth = Capital

The growth theory is an approach that focuses on

 Classical Growth Theory

Classical Growth Theory is the view

This figure shows the

• Growth ends only if technological change stops.

This figure shows the

The endogenous growth theory is based on the analysis and

3. There are increasing returns to scale by investing in human capital through

 It is implemented through regulatory

I. Altering the Saving Rate .

 Economic growth enables consumers to consume more goods and services

You might also like