Skip to main content

2.6 What are the causes, costs and constraints on economic growth?

What students need to learn:

Students should be able to:
Additional Guidance Notes
Actual and potential growth
Identify trends in growth rate; sustainable growth; understand output gaps in developed economies.
Changes in the level of GDP should be distinguished from changes in the rate of growth of GDP, for example, the level of
GDP still rises when an economy grows at a slower rate, as long as growth is positive.

Students will not be expected to know specific numerical information for various countries.
Causes and
constraints on
Explain the significance of factors such as investment or innovation; constraints may be in terms of absence of capital markets or instability of government.
Students should consider some of the following, for example:
  • impact of migration
  • impact of changes in birth rates
  • export-led growth.

Students should understand changes in injections and leakages affect changes in the flow of income.
Benefits of growth
Understand the benefits of growth to citizens of increased standards of living, to firms (increased profits) and to government (for example, increasing tax revenues).
Students may consider whether an increase in income necessarily increases living standards.
Costs of growth
Understand the adverse consequences of growth for the environment; Balance of
Payment problems; income distribution and the opportunity cost of growth.
Evaluation might consider whether the benefits or costs are greater, the difficulties of measurement and the changes over time.

Popular posts from this blog

Factors of Production and their Rewards

Type Definition Reward Land Labour Capital Enterprise All natural resources The physical and mental works of people All man made tools and machines All managers and organizers Rent Salary/Wage Interest Profit/Loss

Factors Affecting Geographical Mobility of Labour

Geographical Mobility of Labour refers to the movement of workers from one place to another place.  It depends upon; ·     cost of housing ·     cost of relocation ·     availability of social amenities ·     family ties etc

Common Barriers to Occupational Mobility of Labour

Barriers to Occupational Mobility of Labour ·     Lack of natural abilities ·     Lack of qualification ·     Cost and length of training ·     Discrimination ·     Ignorance of available job opportunities Ways to increase Occupational Mobility of Labour ·     By providing training and retraining ·     By organizing job centers