Question

I need to answer a question about International Economic( text book by Robert Carbaugh). At least 200 words.

What does growth of some economies and not others IMPLY (Ch. 6, page 189)?

Answer 1

There are economies that grow well consistently, whereas some of the economies struggle when economies are evaluated in different parts of the world. It implies that there are certain reasons or factors that lead to the imbalanced growth rate among the different economies. The first important factor or reason that can be implied, is the presence of sound economic policies in the economy. A good economic policy leads to the efficient allocation of resources, different institutions in the economy moving in the same direction and regulated opening of the economy to the international trade. It brings phase-wise growth and development to the economy and it achieves self-sustainability over a period of time. Though some of the economic suffer from political instability and consequent lax economic policy. It brings conflict and economy suffers.
The second reason the relative presence or absence of the infrastructure that acts as a precursor of the growth. Lack of infrastructure, inhibits growth and government should bring public investment, private ownership and FDI. It will fasten the economic growth. Not, doing so will make the economy to struggle. So, the difference between the growing and stagnant economy imply the significance of infrastructure. The third reason is the presence of growth oriented banking policy that promotes the trade and investment. It will make funds available for the firms to invest and build capabilities. The fourth implication is the presence of investor confidence and private rights promotion in the economy, leading the economic growth in the country.
So, the presence or absence of these factors decides the growth in one economy and stagnancy in another economy in the world.