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What is economic growth?

What is economic growth? CompaReferencesre Australia with any other advanced economy or developing country and discuss their economic growth during last 5 years and its effects on the society. (both positive and negative).
 

Economic growth is the continuous change in aggregate output over time. Economic development is the persistent increase the welfare of a population. Without economic growth there is no economic development and vice versa.
Economic development can generally be defined as sustainable growth from three perspectives: economic, social and environmental. Such qualified growth has several implications:
The growth means increased production recorded a country over time. Development studies the growth of an economic system over a long period of time, incorporating the changes in this horizon occurs: the productive structure, technology, institutions, social relations and policies that affect the economy becomes the guidelines product distribution. Therefore, long-term growth involves the development, since transformations occur in the system. In a long period of time no growth without development.
The development is also applied as a concept of economic policy fraught with social and moral content. It is aimed at the development of a country, a society, a collective. The development goal, which usually means an improvement in social welfare. Thus, economic growth is only development in terms of greater well-being, if equitable, if modernizer and at the same time driver of social progress if it is sustainable, if it finally means human development, understood as a step towards the full realization of everybody (Aghion and Durlauf, 2005). This concept of development is generally proposed by governments, multilateral development agencies, non-governmental organizations that pose objectives of social progress, political parties and so on.

When we distinguish development as a real process of change of a capitalist economic system-specifically, that does not necessarily lead to greater equity and social welfare and development as a social and political objective that must meet certain standards. In the first case, the long-term growth necessarily imply development; in the second case, growth is not equal to development, to be development must meet certain pre-defined requirements and standards that are usually sustainability and equity and social welfare.  

A first (and limited) quantitative approach to the concept of economic development in both Australia and China takes into account certain magnitudes that express the intensity of macroeconomic flows. The development involves the expansion and intensification of actual product flows, income and expenditure per inhabitant (thus has a reference to the population, target last of functioning of the economic system (Aghion and Durlauf, 2005). Is usually measured through variables such as per capita GDP, per capita income or expenditure per capita, expressed in purchasing power parities (to eliminate the effect of heterogeneous price levels in different countries).

in 2013 due to the combined effects of slower growth in China, the falling prices of mineral raw materials and volatility of markets. In addition, the country surveys conducted in June and July 2013 indicate that the terms of trade, profit expectations and business confidence are below the average. After an increase of 3.6% in 2012, it is expected that economic growth will slow to stand at 2.4% this year.

Economic Growth in Australia

Predicting growth of 2.7% in 2014 is more uncertain when meeting the Australian economy in transition, with a reduction of investment in mining and questions about the ability of the non-mining sector to assume the role of engine of growth. (Cavalli, 2002)
Private consumption growth was reasonably good in 2012, at 3.2%, and rose in early 2013 to increase sales due to a fall in retail prices. However, consumer retail spending has fallen since, and this year is expected to grow only 0.9%.
Unemployment was low at slightly more than 5% in 2012, but since the beginning of 2013 a trend seen upward, reducing employment. Unemployment rose to 5.7% in June and July and is expected to stand at around 5.6% for the whole year.
In general, given market conditions persistently poor working and modest growth of household wealth, it is likely that private consumption growth remains below trend, reaching this year at 1.9%, with possibilities to improve in 2014 reaching 2.7%. Last year, inflation in Australia was relatively low at 1.8% however increases in inflation is expected in 2013 [2.2%] and 2014 [2.7%].
Investment in the mining sector
2012 was clear evidence that is no investment has peaked be seen in the sector. There are still several projects underway liquefied natural gas to maintain a high level in the mining construction to completion in early 2017. However, new projects continue to shrink in an environment of volatility and falling prices of raw materials.
In addition, provisional economic data for the first quarter of 2013 indicate a weakness of investments in the non-mining sector suggest a slight increase in the next 12 months. Under these conditions, predictions of growth in real fixed investment only point to 0.9% in 2013. In 2014, it is expected to increase the rate of investment growth to 5.7%, but there are risks in Here, especially in the absence of new mega-projects on the horizon (Cavalli, 2002).
 Increasing prices of mineral exports in the case of iron ore and coal between 2009 and the third quarter of 2011 due to rise of AUD to USD . However, during the first quarter 2013, despite the fall in mineral prices since late 2011, AUD remained obstinate and historically high for various reasons, including an increase in portfolio investments [to be considered in Australia a safe haven], the relative strength of the Australian economy and the gap between interest rates in the country and abroad.
The relatively high level of AUD affected the tourism sector in Australia and export demand their manufacturing and educational services. In addition, the manufacturing sector struggled to compete against imports, particularly in the case of steel and automobile production.
Lower growth expectations in China; the fall in mineral prices; and a confidence drop in the prospects for the Australian economy. In general, it is considered that the depreciation of the AUD is a positive factor, as it should give a respite to the export sectors and help rebalance the growth of the economy.
It is expected to continue being operated a moderate depreciation of the AUD relative to USD during the remainder of 2013 and throughout 2014, with a further devaluation of 10% in late 2014 to be around $ 0.83. The planned depreciation partly reflects the prediction of a strong economy to continue recovering US USD. To this must be added the specific effect on the AUD of the slowdown in the Chinese economy and falling export prices of minerals. Economic development can generally be defined as sustainable growth from three perspectives: economic, social and environmental. Such qualified growth has several implications:
The growth means increased production recorded a country over time. 

Economic Growth in China

But how really worrying is the second largest economy after the United States, it has grown "just" 6.9% this year?  Make no mistake. Everyone, even his detractors have to admit that economic growth in China over the past three decades is a miracle.
The Asian giant accounts for 18% of world GDP [3] and its large population (1.344 billion people contributes 22% of the total world population.
China is characterized by having carried out a model totally different from the usual in countries that are now considered developed economic development. While it has achieved so far considerable economic growth, still it presents realities of an underdeveloped country; for example, per capita GDP (Gross Domestic / Total Population Product) in 2011 was $ 5,445, well below countries considered economic powers. Also have wider social inequalities among the population of the cities and countryside.
China bases its economic model on the binomial "cheap investment-exports", which demand high savings rates. The savings is largely in the hands of state enterprises. 60% of the country's productive sectors in the state sector; but these companies do not depend on the central government but of local or provincial governments. There are two peculiarities in Chinese state-owned enterprises
 This type of intervention, especially printing Yuan currency undervalued to maintain exerts inflationary pressures on the economy of China. But to control their exchange rates without causing any macroeconomic havoc, the Chinese central bank also needs to limit capital flows. But these restrictions on the free movement of capital, which serve to sustain the current model of "export-investment-savings", also generate additional economic distortions [10]:
  Interest rates on deposits are often negative. In periods where the level of inflation is higher than the remuneration of the deposit, Chinese savers lose purchasing power. The second option savings for the average Chinese, apart from bank deposits, are investments in housing and stock market, which carry the risk of real estate bubbles are created.
Many analysts suggest that "China is very close to its potential growth." While in the last 20 years has presented an average growth rate of 10%, it can be seen that their rates are decreasing (in 2011 showed a growth of 9.2% and according to the International Monetary Fund will present growth of 7, 8% and 8.2% in 2012 and 2013, respectively.)
While its inflation rate continues to rise, which could infer that Chinese production supply would be seeing surpassed by its own demand. It is important to remember that any policy applied to both supply and aggregate demand, not lead to adjustments in the same period. Demand always evolves in the short term, while supply can be modified within long periods of time (half-short term). China has been actively acting on aggregate demand; He applied fiscal and monetary. 

In recent decades, economic growth in china and Australia has been locked in a set of constraints, structural conditions and governmental conceptions that left a marked trail of imperfections and instabilities in the economies, these led to a crisis in the early eighties national, international relations and political views, which gave rise to governments began to rethink the role versus their economies, and to formulate new policies that will engage the new world order in order to ensure and consolidate their production structures (Friedman, 2005).
But these policies were not implemented only to try to respond to economic problems especially in china, also respond to the need to try to solve other scourges that afflict as social inequality, poverty and polarization of income, obstacles that cause damage that go beyond the economic aspect, which affect the quality of community life, stability of institutions and the legitimacy of democracy.
You could say that an economic problem may occur with other non-economic effects of great magnitude. As these conditions have altered the economic and social dynamics of the region may wonder if insufficient economic and social progress of these countries contrasts with the magnitude of the changes that have taken their economic policies and whether those policies have slowed social inequalities , poverty and income polarization.
economic growth, income distribution and poverty in historical ailments
These distortions and rigidities are mainly: the sectored and territorial dualism that characterizes much of regional economies; unemployment, but especially underemployment of broad sectors of the economically active population in china; the high polarization of income which contributes to segment production structures and prevent economies of scale appropriate for many companies; insufficient consolidation of effective public administrations and depositaries of wide margins of social standing; the use of technologies "offline" regarding national levels relative prices; periodic fragility of overly dependent on external accounts of exports of goods with low income elasticity in international demand and domestic savings chronic deficiency of returning to the region dependent excess flow of foreign capital.
Because of these problems in these countries show a delay compared to other economies because having constitutive deficiencies so broad, they paid very high costs in structural terms, technological stagnation and weakness of the dynamic connections between social, productive and political agents  .
Economic growth and income distribution
High concentration of income in australia is associated with their stage of development and the characteristics of their resource endowment. Degree of development versus economic efficiency of a country is presented as the addition of several elements among enterprises, public institutions, educational structures, political institutions, scientific research centers and multiple interactions that occur between them
Poverty, inequality and its determinants
At present, various organizations have coincided in pointing out that the growth of poverty and in China has increased, all this right in a period of dominance of economic strategies linked to the neoliberal model as has also been given in the region an unprecedented growth in foreign investment (over 46%)
Meanwhile, throughout the continent still maintaining wage restraint policies. And when it begins to move that background, the spokesmen of transnational corporations and their officers governments are quick to threaten to capital flight.
Poverty, large in cities is even greater in the fields. A poverty that unequal distributions of mass production inputs rise, unemployment and low incomes are mixed. (Jorgenson, 1998)
The process of trade liberalization took place after a decade of declining social spending. The bias in labor demand towards more skilled work, therefore, an inelastic supply of such workers, there was also during the process of liberalization, clear efforts to engage the demand and supply of qualified employees.
Macroeconomic policy that accompanied the reform process, especially the trend to revaluation of exchange rates and open capital account, generated growth patterns in which exports showed less dynamic than imports, and sectors producing tradable goods less dynamic than those of goods and non-tradable services, generating bias in the demand for labor as reflected in the relative behavior of wages, plus fluctuations in capital flows have maintained a high volatility of growth rates, making it difficult to generate more stable work positions .
reforms
Because of these problems in these countries show a delay compared to other economies because having constitutive deficiencies so broad, they paid very high costs in structural terms, technological stagnation and weakness of the dynamic connections between social, productive and political agents  .

Trade reforms are well advanced, further progress in the financial sector have advanced much faster liberalization measures can be achieved through greater leveling and tariff harmonization, that efforts to improve systems of regulation and supervision, in the tax field , are large gaps in administration and collections, especially income tax, and broadening the base of value added tax. Privatization has gone very uneven pace across countries and others, so that there are variables spaces in all fields, from the sale of companies in the industrial and financial sectors in some countries until the establishment of systems and institutions stable participation the private sector in various forms of infrastructure, finally, the greatest potential is in the area of ​​labor law, where recent reforms have been rare, despite the enormous rigidities that hamper job creation in the region.
But keep in mind that some of the structural reforms and policies implemented by governments over the last decade, have had positive effects (which are not evidence of the effectiveness thereof), in social and some economic aspects because without such reforms, the per-capita income would be 12% lower, the potential for growth into the future GDP would be 1.9% lower than the current average, the joint productivity of labor and capital have continued falling as it occurred from the seventies, and investment rates have stagnated at levels below 17% of GDP.
These have also accelerated economic growth, but reduced the pace of job creation, due to the obstacles of investment that had been sent down the capital-labor ratio during the eighties, although this is not an inevitable result of the reforms and it would be incorrect to conclude that was the wrong strategy. Indeed, while significantly liberalized have goods markets, foreign exchange and financial flexibility of the labor market has been minimal. deeper reforms, leading to higher rates of economic growth may again raise the rate of employment generation, especially if the delay is corrected in the labor market reforms

Actually you cannot ensure that structural reforms and economic policies are the main cause of the current levels of social inequality in China especially, this inequality has very deep roots that are associated especially to the great disparity in the distribution of capital and wealth, also the experience of the eighties can be considered a clear demonstration of partners both macroeconomic imbalances and the initial impact of the adjustment processes aimed at correcting social costs. 

Conclusions

However, and despite having positive effects on growth, economic liberalization and globalization have increased the challenge of equity and income polarization, therefore it is necessary to implement different forms of growth that allow better distribution of benefits given that the misdistribution of income is not necessarily an aggregate of organizational model of productive activity, but a circumstance.
Finally, development is sustainable growth from the point of view of natural resources and the environment, according to the present and future availability of the same. Therefore, it is growth that does not seriously deteriorate the natural environment, taking into account that natural resources are scarce, they have zero cost( Roy and Chatterjee, 2007). Therefore, the development demands the performance of public institutions that join the system of prices and incentives environmental costs and the principle that "the polluter pays", preventing environmental degradation which spontaneously generates the functioning of markets and the policies themselves sector (agriculture, fisheries, energy, industry, transport, cities, etc.).

 But these policies were not implemented only to try to respond to economic problems especially in china, also respond to the need to try to solve other scourges that afflict as social inequality, poverty and polarization of income, obstacles that cause damage that go beyond the economic aspect, which affect the quality of community life, stability of institutions and the legitimacy of democracy.
Thus, economic growth is only development in terms of greater well-being, if equitable, if modernized and at the same time driver of social progress if it is sustainable, if it finally means human development, understood as a step towards the full realization of everybody. This concept of development is generally proposed by governments, multilateral development agencies, non-governmental organizations that pose objectives of social progress, political parties and so on. Macroeconomic policy that accompanied the reform process, especially the trend to revaluation of exchange rates and open capital account.  

References

Aghion, P. and Durlauf, S. (2005). Handbook of economic growth. Amsterdam: Elsevier.

Andersen, L. (2002). The dynamics of deforestation and economic growth in the Brazilian Amazon. Cambridge: Press Syndicate of the University of Cambridge.

Arora, V. and Cardarelli, R. (n.d.). Rebalancing growth in Asia.

Cavalli, D. (2002). China. New York: H.W. Wilson.

Decoupling the environmental impacts of transport from economic growth. (2006). Paris: OECD.

Fostering research on the economic and social impacts of information technology. (1998). Washington, D.C.: National Academy Press.

Friedman, B. (2005). The moral consequences of economic growth. New York: Knopf.

Goldie, J., Douglas, R. and Furnass, B. (2005). In search of sustainability. Collingwood, Vic.: CSIRO Pub.

Growth in Australian social expenditures. (1986). [Parkes, A.C.T.]: Economic Planning Advisory Council.

Harris, J. (2001). A Survey of sustainable development. Washington, D.C.: Island Press.

Jorgenson, D. (1998). Growth. Cambridge, Mass.: MIT Press.

Nelson, A., Sanchez, T. and Dawkins, C. (2007). The social impacts of urban containment. Aldershot, England: Ashgate.

Paul, E. (2012). Neoliberal Australia and US imperialism in East Asia. [Basingstoke]: Palgrave Macmillan.

Portney, K. (2003). Taking sustainable cities seriously. Cambridge, Mass.: MIT Press.

Roy, K. and Chatterjee, S. (2007). Growth, development and poverty alleviation in the Asia-Pacific. New York: Nova Science Publishers.

Traffic growth in Australia. (2012). Canberra, A.C.T.: Bureau of Infrastructure, Transport and Regional Economics.

Weil, D. (2005). Economic growth. Boston: Addison-Wesley.

Wu, Y. (2013). Regional development and economic growth in China. Hackensack, NJ: World Scientific.

Yao, Y. and Yueh, L. (2006). Globalisation and economic growth in China. Hackensack, NJ: World Scientific. 

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