The paper "Measuring Vietnamese Economic Development" is an outstanding example of macro and microeconomics case study. Economic growth is the measure of how the national income or output or expenditure, usually referred to as Gross Domestic Product (GDP) of a given country increases over time. GDP is the measure of the total volume of services and goods that are produced in an economy over a period of one year, usually known as a fiscal year. Economic growth is measured by the percentage change in the GDP over the given fiscal year. It is measured in terms of production, incomes, or expenditures (Gillis et al. , 1992, p.
25). Economic development puts into consideration more statistics than just the economy’ s GDP. It concerns itself with measuring how well people are by encompassing the qualitative aspect of economic growth. It measures changes in the people’ s standards of living as well as their economic freedom to enjoy the good living standards. Variables considered while measuring economic development include the people’ s values, fashion, and tastes. It reflects the relative welfare of the people by measuring variables such as the ratio between health personnel, hospital beds, radios, newspapers, telephones, or TV sets and the population of the given economy.
Life expectancy, adult literacy, as well as GDP per capita adjusted for inflation, are fundamental variables in measuring economic development (Gillis et al. , 1992, p. 47). While economic growth can occur devoid of economic development, it is not possible to have economic development without economic growth. As discussed earlier, economic growth is one of the variables that are considered while measuring economic development. However, there are cases in which an increase in GDP does not translate into actual improvements in the standards of living of the people (Gillis et al. , 1992, p.
60). First, economic growth could only benefit a small percentage of the population. For instance, if economic growth is as a result of growth in oil production of a given country, it may end up benefiting just the owners of the oil firms without necessarily benefiting the average worker. Secondly, in case the growth in the economy occurs in a country marred with corruption, the benefits may end up being siphoned into the political class bank accounts.
Thirdly, economic growth that results in environmental problems does not make the lives of the people any better. In addition, increasing GDP as a result of higher military spending does not amount to economic development. Lastly, if economic growth results in externalities such as congestion, the living standard of the people is negatively affected (Gillis et al. , 1992, p. 71). One of the most widely used models of economic development is Rostow’ s Stages of Economic Growth. According to the model, economic growth follows five stages, of variant length and complexity namely traditional society, preconditions for take-off, take-off, drive to maturity, and age of high mass production.
The traditional society stage is characterized by a rudimentary sector economy with limited technology and a rigid society that prioritizes stability. The Preconditions for take-off stage encompasses economic change driven by external demand for raw material and the commercialization of primary production sectors such as agriculture. It is also characterized by significant changes in the social structure of society. The take-off stage is evidenced by an increase in urbanization and industrialization, as well as technological breakthroughs.
In this stage, a shift occurs from primary production to secondary sector products such as the apparel and textile industries. The Drive to Maturity stage encompasses fundamental strides in transportation infrastructure as well as social infrastructures like schools and hospitals. In this stage, manufacturing is no longer in capital goods but for domestic consumption and in consumer durables. The Age of Mass Consumption is the last stage and is characterized by a domination of the industrial sector as well as widespread consumption of high-value consumer foods such as automobiles.
The disposable income of consumers in this stage is beyond all basic needs and can, therefore, be used to purchase other goods as well as for savings(Rostow, 1990, p. 30).
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Gillis, M., Perkins, D.H., Roemer, M., Snodgrass, D.R., others, 1992. Economics of development. WW Norton & Company, Inc.
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Geneva, Switzerland. Rostow, W.W., 1990. The stages of economic growth: A non-communist manifesto. Cambridge University Press.