The economic growth of a country reflects its overall
development. If the economic growth is high that means there is
high per capita income of people, low employment, high
infrastructural development, higher level of education and high
foreign trade etc. and if economic growth is low than there will be
low income level, high unemployment, low education level, poor
health services etc.
That’s why we care because If the economic growth of US is too
slow it means the development of people welfare is also low, large
number of people are unemployed and wage rate is low etc.
Comparison of US economic growth with China and
Canada:
We have picked these countries as they are the highest trading
partners of US.
- US economy is developed economy while China is a developing
economy. But the Chinese economy is growing faster than US economy
and spreading its foreign trade all over the world. China is the
highest trading partner of US so US should care about China because
the change in economic dimensions of China will also affect the US
economy. These countries have divergence in economic growth due the
type of their economy as US is developed while China is developing,
being a developed economy US has exploited its natural resources
while China is still exploring its natural resources, the
population of china is very high as compare to US so the labour
force is available at low cost while there is high labour cost in
US due to which they take low cost labour from other countries
keeping unemployed their own labour force and the US import from
China is higher than its export to China.
- The US economy and Canadian economy are almost similar as they
both are developed country but due to their growth rate, labour
productivity, government and trade policies etc. they differ.
Canada is the second largest trading partner and neighboring
country of US so any change in economy of Canada affects US
economy. The economic growth of US and Canada diverge from each
other because the foreign trade policies differ in both the
countries, the taxation rates, government spending and different
type of monetary and fiscal policies are different in both
countries resulting diverge economic growth rate.