Requirement for Economic Growth - Essay Example

Economics
1.) Provide a perspective on a requirement for economic growth. 
Economic growth is generally measured as either an increase in real output or an increase in real output per capita. In a nation, economic growth increases material abundance and raises a nation’s standard of living. Six factors are considered determinants of economic growth: the quality and quantity of human resources; the quality and quantity of natural resources; the stock of capital facilities; technology; the level of aggregate demand; and economic efficiency. Any improvement in the aforementioned factors will bring about economic growth. However, this section will only take a look at the effects of technological advances in furthering economic growth.
Malthusian economics posits that the world economy is in danger as the arithmetic growth of food production cannot keep up with exponential population growth. What he fails to anticipate is the rapid technological improvement that significantly improved productivity. The present world situation becomes proof of how technology has improved efficiency among economies. It should be noted that technologically advanced countries like the United States and Japan enjoy a high level of production compared to their less advanced counterparts.
The technological change can be illustrated as a shift in the production possibility frontier. With technological advancement, processes in the value chain are conducted more efficiently. Mechanizing processes even necessitates the employment of fewer human resources which can significantly slash production costs. These resources can then be channeled to the production of other goods.
2.) Provide a perspective on how to effectively create jobs or reduce the number of unemployed. 
To prescribe a solution for the problem of unemployment, its causes must be first laid out and fully understood. There are four types of unemployment each with different causes. This section will examine how to efficiently create jobs and reduce demand-deficient unemployment. Demand-deficient unemployment occurs when there is not enough demand to employ all those who want to work. It is also known as cyclical unemployment as it directly varies with business cycles. It can be noted that when the economy is booming, there is a strong demand for employees from various firms. This will cause a low level of demand-deficient unemployment level. However, during times of recession, demand for labor will drop thereby causing an increase in demand-deficient unemployment.
Economic growth and unemployment are seen to be inversely related. As the economy grows, more jobs are created, and unemployment declines. The primary solution to cyclical unemployment is economic stimulation. Economic growth often brings about development in industries and opportunities in business organizations. These necessitate the employment of workers who will man the production of commodities. Economic growth is seen to increase the demand for labor to meet the expected boost in demand for products in services. Looking at the real-world situation, more economically developed countries have a lower level of unemployment than their less-developed counterparts. It was also mentioned that business cycles are more prevalent during economic recessions requiring lay-offs. During economic booms, however, the demand for human resources is high due to rapid job creation. It is therefore important to maintain and sustain economic growth to efficiently create jobs and job employment.      
3.) Provide an economic prediction. 
Economic forecasts are often made by economists to take a glimpse of how the economy is likely to perform. Forecasts are often based on historical data and likely market conditions. The United States and other countries around the globe release their annual and quarterly economic outlook which is a prediction of the future economic performance. 
The Organization for Economic Development forecasts that the US economy will continue its impressive development. It should be noted that in the past years, the nation can surpass the increase in oil prices and damaging hurricanes. Amidst all this, the US was able to post a decline in unemployment and stable inflation. However, growth is expected to improve at a slower pace which shows the lagged effects of the aforementioned economic problems. Employment is expected to increase by 1% in 2006, slashing the unemployment rate from 5.1% to 4.7%. U.S. real GDP is forecast to grow by 3.5 percent in 2006 and only 2.2 percent in 2007 attributed to the downturn in housing markets. Strong growth in investment spending and exports will enable the economy to avoid a recession next year. Slower U.S. economic growth will help lower world oil prices over the near term.
4.) Provide a perspective on the accuracy of economic data and forecasting. 
Economic forecasting is an essential tool used to predict the performance of the economy by looking at historical data. However, economic forecasting is only accurate if the model is fed with accurate data. 
5.) Provide a perspective on the government’s role in creating a more competitive environment. Read More