Stages of Economic Growth

Importance of Economic Development Poverty is economic problem, causes social discontent & political unrest Economic development significantly reduces poverty

Impact of Economic Growth 1990 – 1.9 Billion in developing countries living below poverty line 2010 – Poverty numbers fell to 1.2 Billion Progress due to economic growth since 1981

Concern for Developing Countries People in more developed countries feel responsibility to help those w/ less income & wealth Concern also selfish: – Developed country needs steady supply of materials – Developing country provides market for products

Political considerations – Political systems looking for allegiance – Strong market economies make growth faster – Cooperate with developed countries – Economic cooperation leads to stable political climate Concern for Developing Countries

Stages of Economic Development Primitive Equilibrium – No formal organization, nothing measurable changes, culture & tradition direct economic decisions Transition – Society moves towards change, country doesn’t grow, customs begin to crumble, try new patterns of living

Takeoff – Grows more rapidly, look for better way of doing things, saves & invests income, new production techniques increase growth, agricultural production improves Semidevelopment – Economy changes, income grows faster than population, builds core industries, spends more on capital investment, technological advances Stages of Economic Development

High Development – Efforts to obtain basic necessities more than successful, focus on consumer goods, services & public goods provided Stages of Economic Development