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Production and Growth - Essay Example

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Mazen Al-Abdulaljabbar Dr. Neerja Aggarwal Macroeconomics – Econ 202 April 10, 2013 Production and Growth INTRODUCTION A profound diversity concerning production and growth has been experienced in different countries around the world. Therefore, this paper identifies these differences and it conducts analysis in order to determine their causes…
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On the other hand, explaining differences relating to growth and productivity among countries around the world required significant understanding of their determinants. It also important to note that, growth rates among different countries around the world are not constant; in fact, they are highly dynamic (Zhihua and Kai, 4). Moreover, countries that are considered poor are not destined to a state of poverty; for instance, countries such as Singapore had low incomes during 1960, but currently her incomes have significantly increased.

Therefore, economic stability of a country is not taken for granted since; there are increased chances of being overtaken by other poorer countries that are growing more rapidly. FACTORS AFFECTING PRODUCTIVITY AND GROWTH GDP and income in a country increases due to workers’ productivity, thereby leading to increased living standards for the citizens. Productivity and growth rate in a given country is also facilitated by technological knowledge since it enhances the production process. Furthermore, in order to understand productivity and growth in a country, human capital is understood based on perspective through which people contribute to expansion of knowledge acquired in the field of production.

Furthermore, there is need to understand policies, which influence determinants of growth in a country. Some of these growth determinants include international trade, health, nutrition, health, property rights and political instability and others; In fact, it is also vital to understand investment, savings and the policies that affect them. Output per unit labor is also one of the major determinants of living standards among citizens in a country. Therefore, the discussion in this paper focuses on comparing productivity in different countries depending on physical and human capital per worker, and natural resources.

Moreover, evaluation of growth among different countries is based in technological advancement, which improves living standards. INCOMES AND GROWTH AROUND THE WORLD Rates of growth among countries across the world are highly dynamic due to numerous underlying factors. Therefore, numerous changes occur over a period of time, whereby poor countries acquire chances of improving their productivity and growth to an extent of surpassing other countries. On the other hand, decisions made by various political actors in a given country can affect their growth negatively or positively; thus, leading to decline or increase of productivity.

The graphs below show GDP per captial during 2009 and growth rate from 1970 up to 2009 for different countries in order to compare their growth and productivity rates. DETERMINANTS OF PRODUCTIVITY Physical Capital per worker (K/L) In any country, the physical capital refers to the tools and machinery used for production and infrastructure such as roads and ports, which facilitates mobilization of factors of production. In fact, physical capital is an attribute of growth and productivity in a given country since it is applied in production of output.

However, there is a profound difference between physical capital and technology since it constrained, thereby being used by particular workers. In this case, productivity and growth is caused by substantial difference in physical capital between developed and developing countries. For instance, a survey conducted in 2000

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