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Economic growth - the basis of each country’s long term economic development plan

25 Ianuarie 2022

Economic growth is the basis of each country’s long term economic development plan. From my perspective countries that make every decision following a well prepared structure have a better chance of improving their current economic situation and will surely transform from developing to developed countries. The reason behind choosing this topic is the importance of having a well developed economic growth plan that could completely transform a country for the best.

In order to build a structure countries may use different economic theories, like the social and Post Keynesian theories. From a social economic perspective, one of the best ways to grow a country economically is to build a social cohesion in the population. For example, in 2011 2.3 million people in the UK were in an inter-ethnic relationship, a 2% increase from 2001. This fact can also be presented as a Post Keynesian concept, namely capital versus labor. In 2001 the productivity per hour worked in the UK was 40.50$/h whilst in 2011 there was an increase to 46.15$/h showing that the amount of capital each individual’s labor gave was increasing. Social economics has another solution to grow the economy, trust, which can be gained by showing the population they can rely on the government to receive aid in case of a financial emergency. On the other hand, Post Keynesian economics has a concept that lowers economic growth if it is not used correctly, namely uncertainty. The current pandemic related uncertainty has taken a toll on the economy in the UK, in May 2021 the economic growth rate was 3% lower than in February 2020. Another social economics concept that definitely helps an economy evolve towards a more successful future is power, where the government and other social groups have to work together in order to become more powerful as a unit and achieve a better financial situation for the following generations. In comparison, from a Post Keynesian stand point the least power someone has is when they are sunken in debt. Statistics show that in 2018 UK households debt was at £1.28 trillion of which 91% was property debt. Social economics have another important concept relevant to the economic growth of a country, called social groups. These are fundamental to the decision making process in a country as the leaders of these groups essentially influence what the entire population does. The Post Keynesian concept called the multiplier effect says that the more the government spends the more the economy will blossom. That said, government investment in the UK in 2021 increased by 28.9% compared to the previous year, nonetheless, the economy didn’t have the best results mainly because of a few factors, like the pandemic.

Economic growth in the UK in the last 70 years
This table clearly shows the way the growth of the GDP dropped in the period of time that were filled with national crises and how the economy always regained a solid growth rate after overcoming these difficulties.
To sum up, economic growth can be achieved by building a solid structure based on economic theories, either social or Post Keynesian, but the focus should be on building the best possible economy for the hard working people.

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