Economic Growth With Equity
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Transcript of Economic Growth With Equity
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ECONOMICGROWTHWITH THEEQUITY
PRESENTEDBY
ANMOL VERMA
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Economic growth
Economic growth is a term used toindicate the increase of total GDP.
It is often measured as the rate ofchange of gross domestic product(GDP). Economic growth refersonly to the quantity of goods andservices produced; it says nothingabout the way in which they areproduced.
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The World Economic growth
Total GDP (2008): $70T Population (2009 est.): 6.8B
GDP per Capita: $10,000 Population Growth: 1.17% GDP Growth (2008 est.): 3.8%
GDP per capita is probably the best measure of a countrys well being
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Region GDP % of World
GDP
GDP Per
Capita
Real GDP
Growth
United States $14T 20% $47,000 1.3%
European Union $15T 21% $33,000 1.0%
Japan $4.3T 6% $34,200 -.4%
China $7.8T 11% $6,000 9.8%
India $3.2T 5% $2,800 6.6%
Ethiopia $66.3B .09% $800 8.5%
Note. However, that growth rates vary significantly acrosscountries/regions. Do you see a pattern here?
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ChinaGDP/Capita: $6,000GDP Growth: 9.8%
United StatesGPD/Capita: $47,000
GDP Growth: 1.3% ( ) 853,60$013.1000,47$20=
( ) 922,38$098.1000,6$ 20 =
Currently, GDP per capita in the US is around 8 times that in China. However,at the current growth rates, that will shrink to a factor of 1.5 over the next twodecades!
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At the current trends, the standard of living in China will surpass that of theUS in 25 years!
PerCap
ita
Inc
ome
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Income GDP/Capita GDP Growth
Low $510 6.3%
Middle $2,190 7.0%
High $32,040 3.2%
As a general rule, low income (developing) countries tendto have higher average rates of growth than do highincome countries
The implication here is that eventually, poorer countries shouldeventually catch up to wealthier countries in terms of per capitaincome a concept known as convergence
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Some countries, however, dont fit the normal pattern of development
ZimbabweGDP: $2BGDP Per Capita: $200
GDP Growth: -12.6%
Macau (China)GDP: $18BGDP Per Capita: $30,000
GDP Growth: 15%
It current rates, Per capita income is Macau will quadruple to$120,000 over the next decade. This will make Macau thewealthiest country in the world. Over the same time period, per
capita GDP in Zimbabwe will drop by roughly 75%to $52!!!
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Elements of economicGrowth
Poverty Reduction and increase inquantity and quality of employment
Agricultural Development Social Sector Development
Reduction in regional disparities
Protecting the environment
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Trends in Poverty (%): India
Year Rural Urban Total1973-74 56 49 55
1983 46 41 45
1993-94 37 32 362004-05 28 26 28
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reduce poverty, eliminate hunger,and raise the standard of living of
the populationDeclaration of Nuevo Len
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Employment
Sector 1961 2004-05
Agriculture 75.9 56.4
Industry 10.6 18.2
Tertiary 12.4 25.4
Total 100.0 100.0
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Problems in Employment
Share in Output and Employment of different sectors
Agriculture: 20% in GDP, 57% in Employ.
Industry: 23% in GDP,18% in Employ.
Services: 57% in GDP, 25% in Employ. There are 458 million workers in India in 2004-05
Out of this 423 million workers areinformal/unorganised workers (92%).
The share of employment in manufacturing in Malaysiais 50%, in Korea 62%, in China 31%. On the otherhand, the share of employment in manufacturing inIndia is only 12%
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Agriculture--Deceleration in growth from 3.5% during 1981-97 to 2%
during 1997-2005. Decline in yield growth. -- Land and water problems, vulnerability to world
commodity prices, farmers suicides, 45% of farmerswant to leave agri but no where to go. India currentlyproduces about 50 million tonnes of fruits and 90 milliontonnes of vegetables. Only 2% of these are processedas against 23% in China, 78% in Phillippines, 83% inMalaysia.
Half of those engaged in agriculture are still illiterate andjust 5% have completed higher secondary educ.
Even in 2004-05, around 60% of rural male workers and85% of rural female workers are either illiterate oreducated upto primary level.
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Social Development
In social sector, significant achievements ineducation and health
However, Human development index rank is
127 out of 170 countries. Slow progress Significant regional, social and gender
disparities
Low level and slow growth in publicexpenditures particularly on health Poor quality delivery systems Privatization of Health and Education
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Regional Disparities
Per capita income : Highest per capita incomeRs.16,679 in Punjab; lowest per capita incomestate Rs.3557 in Bihar
Female literacy varies from 33.6% in Bihar to 88%in Kerala
In general, richer states grew faster than the poorerstates.
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Environment Degradation of land, water. Increase in pollution levels
Challenges of climate change.
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What Should be done to improveinclusive growth?
Equity is important for economic development Agricultural Development Economic reforms are important. But macro-poor
policies (fiscal, trade, financial, monetary etc.)
should have pro-poor focus Development of manufacturing sector is important forcreation of productive employment
Equality of opportunities (education) Shift focus of reforms to delivery systems
Importance of womens economic and socialempowerment
Rights approach (civil, political and economic)
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Conclusion
There is a need to have a broad based and inclusivegrowth to benefit all sections of society and improveeconomic growth.
It is more challenging for the country to achieve
inclusive growth than getting 8 to 10 per cent growthin GDP There is also an economic argument. The measures
which raise equity also promote economic growth. Lastly, the political argument is that no government in a
democracy can afford to ignore large sections ofworkers and non-working population.
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THANK YOU
