In: Economics
How can we, as economists, measure long-term economic growth for
countries around the world?
How can some nations with few natural resources, such as Japan
and Singapore, be relatively wealthy?
How can other nations with vast amounts of natural resources, such as Nigeria and Russia, be relatively poor?
Economic measure the economy of the a country by calculating the real GDP of the country. The economic growth of a country is measured by using the rate of change in real GDP over a period oF time. Economist find the long term economic growth of a country using the following factors.
Employment rate and labour force participation rate of the country. If the labour force participation rate increase than the people who are available to do work can be found and the employment rate will tell the total number of workers that are employed in the economy. Most of the countries economic growth will depend on this as if the employment rate is high than obviously the country will see growth in its economy.
Availablity of natural resources in the country also play a major role in the growth of a country but these resources cannot be utilised without growth in productivity , so this is always a last concern to find the growth in the economy in the long run.
Growth of productivity will see that using the available resources they are producing the goods at low costs which means the country is having good production techniques which leads them to earn profits in the economy. If the firms are earning than the production sector is growing.
So economist use these conditions to find the growth in long run in an economy.
Countries like Japan and Singapore may not natural resources for production but they have labour force and Production equipment with them which make them as the developed countries in the world as they can import these natural resources by paying money.
Countries like Nigeria and Russia may have natural resources but they don't have Factors of production and labour force with them ,that is why these countries are not able to see growth in their economy.