Economic Growth In Developing Countries

1. INTRODUCTION

Economic growth is how our country uses scares resources in order to improve the economy. Examples of scarce resources are coal, gold, diamond and raw materials. In order to be profitable we need to use these resources wisely and without any waste, do anything valuable to get money. This is where the business cycle is relevant. The business cycle is how our individual businesses contributes to the economy by buying and selling scarce resources. Businesses have to employ people and to manufacture resources and then sell them to make money and make profit which boost our economic growth. Economic growth is most important as it tells how ones’ economy of a country stand ad its GDP to classify whether the country is a developing

Usually economic growth is considered a good thing for the economy. Positive economic growth actually occurs only when total real production or income is growing at a faster rate than the population. In practice, however economic growth is usually simply measured by determining the annual growth in real production. Total real production is commonly represented by real gross domestic production (real GDP). In addition, in the short term, GDP fluctuates around the long-term rate of growth and these fluctuates are known as business

In the boom phase the pace of the economy becomes faster and effects of the multiplier become more marked. For example, if the business conditions improve, such an improvement is reinforced by mechanism such as multiplier. A strong upswing therefore results. However, one upswing carries the seed of its own destruction. As the economy grows unemployment is likely to be low incomes will be high and people will be willing to spend, imports increase, foreign exchange reserves fall, and so on, until peak is reached which we can regard it as a stationary