Economic growth is a long-term expansion of the productive potential of the economy
Trend growth refers to the smooth path of long run national output
Measuring the trend rate of growth requires a long-run series of data perhaps of 20-30 years or more in order to calculate average growth rates from peak to peak across different economic cycles
The table below tracks the growth rates achieved in the world economy for three recent years and also for developing countries excluding China and India.
|Real GDP growth (annual % change)||2010||2011||2012|
|Developing countries excluding China and India||5.6||4.4||3.6|
What determines the rate of economic growth?
Here are some of the main determinants of economic growth – they apply for both developing and developed countries although the relative weighting that we might attach to each will depend on the individual circumstances facing each country or region.
Key exam point:
Threats / Challenges to Economic Growth
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