Why Are Some Countries Richer Than Others?

Topics: Economics, Country classifications, Economic growth Pages: 4 (1495 words) Published: November 11, 2008
Why are Some Countries Richer than Others?

Poverty is still the biggest problem the world faces from day to day. Every country suffers from it to some degree, however certain places are greater effected than others. This is because the level of economic growth differs from country to country. The greater amount of growth the less room there is for poverty. This is simple reason why some countries are richer than others. If countries fail to move forward than it can present many problems. Mainly the needless suffering of many, and generally a lower level of living for all those caught in the trap. It is true that growth does create it own problems such as pollution and congestion, but these are acceptable compromises to reduce the level of poverty. The governments around the world have many policies to try and improve the workings of their economies. Governments will differ in the emphasis they give to particular objectives and the ways in which they try to achieve these. The circumstances around these change from time to time, focusing on certain objectives that need the most influence. Economic growth is an ongoing priority. Governments just have to make sure they manage what resources they have properly, in order to achieve this objective.

Every year there is a ‘league table‘ published showing the level of economic growth achieved by each country. The comparison is made using each countries Gross Domestic Product, or GDP. An important factor to look at is the difference between actual and potential economic growth. Actual economic growth increases in real GDP. This increase can occur as result of using previously unemployed resources, or reallocating resources into more productive areas or improving existing resources. Whereas potential economic growth is the productive capacity of the economy. For example, it can be shown by the predicted ability of the country to produce goods and services. This changes when there is an increase in the quantity or...

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Grant, S. J., Introductory Economics Seventh Edition (Essex, 2000)
Parkin, M., Economics Sixth Edition (Essex, 2005)
Krugman, P., The Myth of the Asian Miracle: Foreign Affairs (London, 1994)
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