growth

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Explaining Theories of Economic Growth

Different models of economic growth stress alternative causes of economic growth. The principal theories of economic growth include:Mercantilism – Wealth of a nation determined by accumulation of gold and running trade surplus Classical theory – Adam Smith placed emphasis on the role of increasing returns to scale (economies of scale/specialisation) Neo-classical-theory – Growth based on supply-side factors such as: labour productivity, size of the workforce, factor inputs. Endogenous growth theories – Rate of economic growth strongly influenced by human capital and rate of technological innovation. Keynesian demand-side -…

Economic Growth and Exports

Economic Growth and Exports

A look at the relationship between economic growth and exports. Readers Question: How would an increase of economic growth lead to an increase in exports? Also, does the increase only happen just in a fixed period of time, or increase in one period is likely to affect the future? Economic growth doesn’t necessarily lead to an increase in exports, although it often does. I don’t fully understand the last question. What determines export growth? 1. Demand from other countries. Demand for UK exports will depend on the rate of economic growth in other…

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Impact of Chinese stock market crash

In recent months, the Chinese stock market has been very volatile, with sharp drops in prices since last July. On August 24th, share prices fell 9% – one of the biggest single day falls. People fear this is the bursting of the Chinese stock market bubble which could have serious effects on the global economy. Possible effects of a Chinese stock market crash include 1. Reduced exports In recent years, China has seen a rise in consumer spending. Consumer spending has been growing at 10% a year. This is an important source…

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Size of Countries and Fastest Economic Growth

Readers Question: How does the size of a country effect the economic growth rate? The two largest countries, (in terms of population) are China and India. By coincidence China and India have the two highest rates of economic growth in the world. (China about 10.9%, India 7.0%) However, this does not prove that populous countries will always have the highest rate of growth. For example, if we went back to the 1960s, it was likely China had a negative growth rate during the disastrous ‘great leap forward’ of Mao where upto 20…