Indicators & Factors Affecting Economic Growth and Development | Economics for JAMB PDF Download

Meaning and Scope

• Economic growth refers to the increase in the real output of goods and services produced by an economy over a period of time. It is usually measured by the percentage increase in Gross Domestic Product (GDP) or Gross National Product (GNP).
• Economic development, on the other hand, encompasses a broader set of indicators and factors that go beyond just the increase in GDP. It involves qualitative improvements in people's lives, such as increased standards of living, improved healthcare and education, reduced poverty, and enhanced infrastructure.

Indicators of Growth and Development

• Gross Domestic Product (GDP): GDP measures the total value of goods and services produced within a country's borders during a specific period. It is an important indicator of economic growth.
  Example: If a country's GDP increases from $500 billion to $600 billion over a year, it indicates economic growth.
• Gross National Product (GNP): GNP measures the total value of goods and services produced by a country's residents, both domestically and abroad, during a specific period.
  Example: If a country's GNP increases from $700 billion to $800 billion over a year, it indicates economic growth.
• Human Development Index (HDI): HDI measures a country's average achievements in three key dimensions of human development: a long and healthy life, access to knowledge, and a decent standard of living.
  Example: If a country's HDI increases from 0.6 to 0.7, it indicates progress in economic development.
• Poverty and Income Inequality: Reduction in poverty rates and income inequality are important indicators of economic development.
  Example: If a country's poverty rate decreases from 25% to 15%, it indicates progress in economic development.
• Literacy Rate: Literacy rate measures the percentage of the population above a certain age who can read and write.
  Example: If a country's literacy rate increases from 70% to 80%, it indicates progress in economic development.

Factors Affecting Growth and Development

• Natural Resources: Availability and efficient utilization of natural resources, such as minerals, oil, and fertile land, can contribute to economic growth and development.
  Example: Countries like Saudi Arabia and Nigeria, with abundant oil reserves, have experienced economic growth due to the exploitation of these resources.
• Capital Accumulation: Investment in physical capital, such as infrastructure, machinery, and technology, is crucial for economic growth and development.
  Example: Countries like China have experienced rapid economic growth by investing in infrastructure projects like high-speed railways and modernizing their industries.
• Human Capital: Education, healthcare, and skill development of the population contribute to economic development by improving labor productivity.
  Example: Countries like South Korea and Singapore have focused on investing in education and skill development, leading to high levels of economic development.
• Technological Progress: Advancements in technology drive innovation, productivity improvements, and economic growth.
  Example: The digital revolution and the development of information technology have significantly impacted economic growth globally.
• Institutions and Governance: Strong institutions, good governance, and the rule of law provide a favorable environment for economic growth and development.
  Example: Countries with transparent and efficient governance systems attract more investment and experience higher economic development.

Objectives of the Notes

• Distinguish between economic growth and development: Candidates should understand that economic growth focuses on the increase in real output (GDP), while economic development encompasses broader aspects, including improvements in living standards, healthcare, education, poverty reduction, and infrastructure.
• Highlight the indicators of growth and development: Candidates should be able to identify and explain key indicators such as GDP, GNP, HDI, poverty rates, income inequality, literacy rate, etc., as measures of economic growth and development.
• Identify the factors affecting growth and development: Candidates should understand the role of factors like natural resources, capital accumulation, human capital, technological progress, and institutions/governance in influencing economic growth and development.