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Transcript of Economic Growth
Opening up new territories was considered a growth factor in the past, not being important since the late 19th century, except in a few areas areas such as Latin America, where forests were cleared in the 20th century for agriculture and in sub-Saharan Africa. There are several theories of Economic Growth
which developed in time:
-Classical growth theory
-The neoclassical growth model
-Endogenous growth theory
-Energy and energy efficiency theories
-Theory of cognitive wealth (cognitive capitalism)
-Unified growth theory
-The big push
-Schumpeterian Growth According to Acemoğlu, Simon Johnson and James Robinson, the positive correlation between high income and cold climate is a by-product of history. Europeans adopted very different colonization policies in different colonies, with different associated institutions. In places where these colonizers faced high mortality rates, they could not settle permanently, and they were thus more likely to establish extractive institutions, which persisted after independence; in places where they could settle permanently, they established institutions with this objective in mind and modeled them after those in their European homelands. In these 'neo-Europes' better institutions in turn produced better development outcomes.These authors look at the environmental conditions in the colonies to explain institutions. Happiness has been shown to increase with a higher GDP per capita, at least up to a level of $15,000 per person.
Economic growth has the indirect potential to alleviate poverty, as a result of a simultaneous increase in employment opportunities and increase labour productivity.A study by researchers at the Overseas Development Institute (ODI) of 24 countries that experienced growth found that in 18 cases, poverty was alleviated.However, employment is no guarantee of escaping poverty, the International Labour Organisation (ILO) estimates that as many as 40% of workers as poor, not earning enough to keep their families above the $2 a day poverty line. A number of critical arguments have been raised against economic growth.
It may be that economic growth improves the quality of life up to a point, after which it doesn't improve the quality of life, but rather obstructs sustainable living. Historically, sustained growth has reached its limits (and turned to catastrophic decline) when perturbations to the environmental system last long enough to destabilise the bases of a culture. Some critics argue that a narrow view of economic growth, combined with globalization, is creating a scenario where we could see a systemic collapse of our planet's natural resources. Concerns about possible negative effects of growth on the environment and society led some to advocate lower levels of growth, from which comes the ideas of uneconomic growth and de-growth, and Green parties which argue that economies are part of a global society and a global ecology and cannot outstrip their natural growth without damaging them.