Not only the level of GDP is important, but also the size of GDP per capita. Here you can also draw an analogy with a family: if a family of two people earns, say, 100,000 rubles a month, then they can afford a lot. And if 100,000 is the total income of a family with six children, besides, three aunts and two grandfathers are dependent? Of course, their standard of living will be lower than that of a family of two with the same income.
GDP per capita shows the income of an average resident of the country – the so-called average temperature in a hospital: Vasya earns 300,000, and Petya is unemployed. On average, they both receive 150,000.
By itself, GDP does not take into account such indicators as, for example, the environment or the level of personal happiness of each inhabitant. So it’s impossible to call it an ideal measure of well-being – after all, the quality of life is not always directly related to the amount of money in your wallet.
Thus, economic growth is an increase in the quantity of goods and services. Is it worth chasing consumption? After all, they say money doesn’t buy happiness. Yes, economic growth is not always synonymous with happiness and well-being, but still, GDP growth has a positive effect on living standards. The wealthier the society, the higher the life expectancy, the better medicine, the lower the crime rate. Caring for the environment is also characteristic of rich countries. Therefore, economic growth is one of the main objectives of the economic policy of any country.
What is economic growth like?
- Extensive is growth by increasing the amount of resources. Suppose the state has a lot of minerals, it lives only at their expense: it extracts and exports; due to this, the economy grows. At the same time, no one develops production, does not invest in technology – the country simply intensively uses the resource until it runs out.
- Intensive economic growth occurs due to the fact that the state improves technologies, masters the achievements of science and technology, and invests in innovative business. Roughly speaking, robots are replacing the hoe and plow – production is improving, GDP and living standards are growing.
Economic growth depends on various factors: for example, how many able-bodied people are in the country, how many qualified specialists, how many natural resources, how technologically production is, whether the socio-political situation is stable, whether investments are developing, etc.