In: Economics
in your own words
So, let's take a look back at the past and see if we can speculate about the future. In 1866, Stanley Jevons predicted that economic growth would come to a halt when England ran out of coal, a doomsday that he reckoned would occur in the mid-1970s. Consider how we avoided that projection – and other similar “doomsday” predications of the past. How can we achieve Long-Term Economic Growth? Should we focus on “Fighting Recession or Encouraging Long-Term Growth?” What Macroeconomic issues confronting our future are concerning to you? Do you think we can avoid the issues? Do you think we can achieve long-term growth? Why or why not?
Consider how we avoided that projection – and other similar “doomsday” predications of the past.
As a result of the dooms day prediction of running out of coal, the country kept on exploring other parts of the word to get resources from them which in turn ended up in setting up colonies spread over many countries and this helped them to get natural resources like coal and steel from other nations.
How can we achieve Long-Term Economic Growth?
Long term economic growth is the increase in the market value of goods and services that an economy produces over time. It is measured in terms of relative change in real gross domestic products.
For attaining increase in the values of goods and services over time it is important to have a situation where the demand for our goods and services are also increasing and also that the natural resources that are consumed in producing such goods or services are preserved with a sustainable point of view.
There are two different strategies that can be effective in attaining it, one being that the supply of our goods and services are reduced r controlled at optimum levels such that the demand for it is at higher side hence increasing the price. The other alternative is the rise in production of such goods and services over the time according to accessed demand.
A case of over exploitation of resources can be reached if goods or services are over produced thus the sustenance of this alternative is short lived.
A controlled supply of goods and services can be sustainable over a longer period of time.
We need to understand that the determinants of long term economic growth are productivity, demographic changes and labor force participation.
We need to understand here that the important factor is labor force participation where the demographic profile of the population plays an important role. Like the case of China which has over achieved its production targets but the demographic profile suggests the the average age of work force is 55 years which means that after 5-10 years the workforce will reduce drastically with more part of the population growing old and not able to continue work. Likewise is the situation of other countries who are developed but are nearing the demographic situation where the workforce is growing older and out of workspace soon.
These are also some factors that should be kept in mind while we plan long term economic growth strategies.
Should we focus on “Fighting Recession or Encouraging Long-Term Growth?”
Ression iis the state of an economy when the market and consumers are phase shifting, this means that the industries which were performing better are no longer in good business or good demand and they are trying to overcome it with involving the resources of Government and the consumers into it.
On the other side the time of recession is also an opportunity for other sectos to come into forefront because the consumer is if discarding one industry or some industrial sectors then in turn should have started liking other sectors too.
The recession in IT and manufacturing sector in 2008 happened and involved all the resources of nations like making a favorable monetary policy and too big to sink policies from the Government and taking privilege of job losses created a situation that till now many countries are bearing the burn but supporting the lost industrial sectors to overcome this low revenue period. But there are new entrants in the global level like internet and e-commerce which are on themselves making it big because the consumer phase shift has turned to the internet dependent, agriculture and services sector and heavy manufacturing sector is lagging behind in gaining consumer attention.
Hence it is not worth it to vest all resources in overcoming recession but to focus on the GDP of the economy from all sectors. The liability of the Government in supporting a business entity or industrial sector is to provide an enabling environment rather than to take the onus of its failures and successes.
What Macroeconomic issues confronting our future are concerning to you?
The micro economic factors that are most concerning are listed here under: