Paul. A (2001, pp.568) states that economic growth is a positive change in the level of production of goods and services by a country over a period of time.” This means that economic growth occurs when there is an increase in the levels of output for production and services. It is brought by technological innovation and positive external forces and can also be seen as a term to indicate the GDP growth. The economic growth is measured by percentage change in GDP (Gross domestic production). Michael. B (2001, pp.20) states that the “Gross domestic product is the sum off net sales within a geographic location during a period of time. GDP is sum of value added, created within a given geographic period of time and GDP as sum of factor incomes earned from economic activities within a geographic location during a period of time.” Basically, GDP is the sum of net sales (final sales), value added (transformation of raw materials to finished goods) and income (earned within a countries border) by residents and non-residents, within a given geographic location during a period of time. GDP is measured using the formula:-
GDP= C [consumption] + I [Investments] + G [Government spending] + (X [exports]) – M [imports]). John. S (2003, pp.384) says that “there are two types of economic growth and to better understand, they must be distinguished”. They are the potential growth and the actual growth. “Actual growth is the percentage annual increase in national output: the rate of growth in actual output”. “Potential is the speed at which the economy could grow. It is the percentage annual increase in the economy’s capacity to produce: rate of growth in potential output.” FOUR WHEELS OR FACTORS OF AN ECONOMIC GROWTH
The four wheels of economic growth are those factors or causes of economic growth. The four wheels or factors of growth are:- Human resources
The human resources include labour supply, education, discipline and motivation. Labour inputs consist of quantity of workers and of the skill of the workforce. In an economy with little work force, it would be hard to achieve economic growth. According to Bized, “the improvement agriculture for land will increase economic growth. On the other hand, increasing land for agriculture will mean that it affects wild life”. So although economic growth through human resources is important, it has it effects on the wild life of the country and affects the environment. Natural resources
These include land, mineral, fuels and environmental quality with the most important factor being land, oil and gas. Countries like Canada and Norway have grown primarily on the basis of their ample resource base, with large output in agriculture, fisheries and forestry (source: economics international edition).
This includes machines, factories and roads. They can also be distinguished between directly productive capital (plant and equipments (factories)) and indirectly productive capital (infrastructure or facilitating capital (roads and railways)). Technology
This Includes science, engineering, management and entrepreneurship, Technology has been rapidly developing over the past 30 years. These improvements have increased the product possibilities of Europe, America and Japan. Some of these are communication, computing, life science, electricity, auto mobile, television, radio. All these put together in a company such as Hollywood, has increase the economic growth of the America.
BENEFITS OF ECONOMIC GROWTH
1.Increased levels of consumption: provided economic growth exceeds population growth, it will lead to higher real income per head. This can lead to higher levels of consumption of goods and services.
2.It helps avoid macroeconomic problems. Without growth in productive potential, people demands for rising income, will lead to inflation, balance of payment crisis, industrial disputes etc.
3.It makes it easier to redistribute income to the poor. If...