Economic growth rate
Course title and number
Economic growth rate
Economic growth rate is the annual rate through which a country’s economic income increases. The effects of growth rate are an indication of both expanding and falling economy. It can be measured by the market adjustments caused by inflation in the value of products and services that have been produced in the economy over a certain period of time. The GDP (gross domestic product) growth rate are used to measure how the economy is growing hence are a good indicator of the economic growth rate. The focus on economic growth is measured on the assessment of an individual country’s economic climate as compared to world economy. The measure of this economic growth rate is done through use of expert judgment and Combining of model base analyses that compare to the previous years.
Average growth rates
The average growth rate is the specific change in percentage of specific variables that contribute to economic growth within a certain period (Ostry et., al 2014) Therefore it is the arithmetic mean of percentage growth rate. The economic growth rate of the United States has been averaged at 3.20% while that of Japan has been averaged at 2.03% over the last 20 years. The Chinese economic growth has expanded year after year with 6.9% growth while Ethiopia has stated a 5.64% growth rate over the last 20 years.
Causes of different growth rates
The economic growth rate varies from one country to another due to different factors that contribute to the GDP of the countries (Scully, G. W. 2014). Every country has its own government policies that have a great impact to the experience change in economic growth. Countries that are developing such as Ethiopia have shown a faster growth rate than the already developed countries such as United States. This has caused stagnation on the economy of some countries which has led to difference in the economic growth rate. The technologies, institutions and methods of production have the potential of bringing a difference in the economic growth rate due to the contribution of GDP on the market. Better industrial and environment relations and low inflations that have increased the economic cycles have led to enthusiasm and dynamism that has improved the economy (Balassa, B. 2014). These have therefore have been the major reasons that have led varying economic growth rate between the countries.
The United States monetary and fiscal policies are the main objectives that govern economic growth rate in the United States due to their long running impact on the GDP of the United States. In China, Adoption of the open door and reform policies has had a great impact on their economic growth rate. Industrial policies that have been established by the Chinese government have been effective to the economic growth of the country. Other policies that have affected China’s growth rate are a strong monetary policy. The government of Japan has adopted the Economic policy package, tax reduction policy through tax incentives introduction for the capital investments and the tax credits (R&D). The Ethiopian government has introduced the National health policy for the socio-economic reformation. It also has a training and education policy that cultivates the citizens to have an active role in the economic growth of the country at different levels. The government has also enhanced other policies on transportation and commercial banks that have enabled economic growth.
The growth rate measure of these different countries has varied due to different influences. The government policies and the population growth have had a great effect on the growth rate of the country. Therefore the economic growth rate of a country is generally impacted by the changes in the country and external impacts such as global market and international economy.
Balassa, B. (2014). Development Strategies’. International Economics and Development: Essays in Honor of Raúl Prebisch, 159.
Ostry, M. J. D., Berg, M. A., & Tsangarides, M. C. G. (2014). Redistribution, inequality, and growth. International Monetary Fund.
Scully, G. W. (2014). Constitutional environments and economic growth. Princeton University Press.