Econs Essay

‘The fast economic growth of China and India in the last two decades explains more about the size of the economy, so the experience of China and India cannot be imitated in smaller economies in Asia’. Discuss

Economic model explain factors of growth

Economic growth is the increase in the market value of the goods and services produced by an economy overtime. One of the ways to measure economic growth will be using the Solows Economic Growth Model. The Solows Economic Growth Model takes into consideration the capital investments, labour and pace of technological change to determine the rates of growth.

Discuss how the size of the large sized economies affect their output and growth. Also include a brief discussion on the challenges of their sheer size on long term future growth

The large size population of China and India contributes greatly to their large size economy and economic growth. Although both China and India have very large economies, however the growth rate between the two economies are not the same. This is because China increases their capital faster than their labour for manufacturing whereas India increases their capital about the same rate as their labour. Thus it is insufficient to develop and less likely to attract foreign direct investment flows for manufacturing. Due to their political instability and inconsistent laws in different parts of their country, it is unattractive to people looking to invest as they are unable to understand how they work.

Discuss other sources of growth of large sized economies

China- modernizing its infrastructure, allowing labour mobility and welcoming foreign direct investment and embracing competition

India – rationalising its domestic economy (improving productivity)

Discuss growth of the selected small sized economies

Discuss if the problems of small sized economies such as large income inequality, slow population growth, ageing population

Some problems of these successful economies are large income inequality, slow population growth and ageing population.

Conclude on the role of market, government and the possible cooperation between the different sized economies

In conclusion, as financial markets play a critical role in the accumulation of capital and the production of goods and services, the government should monitor the market and only get involved when necessary to facilitate the international flow of funds between countries.