Why Growth? The Economist's Perspective

The growth of an economy has generally been seen as a good thing. Throughout history, nations have traded with each other and some have grown rich by exploiting their own natural resources and those of their neighbors or trading partners. The need to protect trade routes meant that from the Greeks and Romans right through to the British and the French empires, economies have grown hand in hand with military power. However, over the last half-century there has been a degree of rebalancing and a shift to create successful economic growth independent of ‘empire.’ Although the cases of oil and other mineral wealth may play against this, it is evident that when productivity improvements impact manufacturing and service-based economies at the same time as trading takes place, we experience economic growth.

Gross domestic product (GDP) is a widely adopted measure of national economic performance. Increases in GDP above and beyond what would be natural given population growth are believed to enable an increase in living standards for the population. Hence the interest in data such as GDP per capita both in real and relative terms. As wide-scale conflict between nations has been predominantly replaced by global trade, the post World War II decades have largely been focused on regions using growth to drive their economies forward, raise living standards, and increase influence. Over 30 years a growth rate of 2.5% of GDP per annum leads to ...

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