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Ashley is an attorney. She has taught and written various introductory law courses.
A country's general economic health can be measured by looking at that country's economic growth and development. Let's take a separate look at what indicators comprise economic growth versus economic development.
Let's first examine economic growth. A country's economic growth is usually indicated by an increase in that country's gross domestic product, or GDP. Generally speaking, gross domestic product is an economic model that reflects the value of a country's output. In other words, a country's GDP is the total monetary value of the goods and services produced by that country over a specific period of time.
For example, let's say that a special berry grows naturally only in the country of Utopia. Natives to Utopia have used this berry for many years, but recently, a wealthy German traveler discovered the berry and brought samples back to Germany. His German friends also loved the berry, so the traveler funded a large berry exporting business in Utopia. The new berry exporting business hired hundreds of Utopians to farm, harvest, wash, box and ship the berries to grocers in Germany.
In one calendar year, the berry exporting business added over one million dollars to Utopia's GDP because that's the total value of the goods and services produced by the new berry exporting business. Since Utopia's GDP increased, this means that Utopia experienced economic growth.
In the United States, our periods of large economic growth are mostly associated with new technology. The Industrial Revolution and the development of the Internet are two examples. When new developments bring an increase in output capacity, economic growth usually follows.
Now let's take a look at economic development. A country's economic development is usually indicated by an increase in citizens' quality of life. 'Quality of life' is often measured using the Human Development Index, which is an economic model that considers intrinsic personal factors not considered in economic growth, such as literacy rates, life expectancy and poverty rates.
While economic growth often leads to economic development, it's important to note that a country's GDP doesn't include intrinsic development factors, such as leisure time, environmental quality or freedom from oppression. Using the Human Development Index, factors like literacy rates and life expectancy generally imply a higher per capita income and therefore indicate economic development.
For example, before the berry exporting business, most Utopians lived in small villages many miles from one another. Few Utopians had access to schools, fresh water or healthcare. Utopian men worked long hours attempting to farm land that was naturally unsuitable for most crops, just to feed their immediate families.
After the berry exporting business, many Utopians found work through the new industry. Newly employed villagers relocated closer to the business, giving them better access to schools, healthcare and fresh water produced for the plant and surrounding areas. Most Utopian men were able to trade labor-intensive hours in the fields for easier eight-hour shifts. Besides earning a salary, the new work enabled them more leisure time and contributed to longer life spans. Thus, Utopia experienced economic development through economic growth.
The U.S. is committed to the economic growth and development of many other countries through foreign aid programs. Foreign aid programs include humanitarian and disaster relief, economic or military support and healthcare programs, such as those involving family planning, reducing infant mortality or prevention of a particular disease. In a broader sense, all U.S. foreign aid seeks to promote economic growth and development in the recipient country.
For example, in fiscal year 2012, the U.S. provided Israel over $3 billion as part of a longstanding aid commitment. Most of this was military assistance for the Israeli-Palestinian conflict, but a large portion was for migration and refugee assistance. The overall hope for economic development is that Israel, our strong ally, can protect its borders and promote the health and well-being of its citizens.
U.S. aid is also focused on economic growth by promoting Israel's greater financial independence. Foreign aid supports the development and export of Israel's natural resources, such as offshore natural gas.
Let's review. Economic growth reflects an increase in that country's gross domestic product, or GDP. Gross domestic product indicates the value of a country's output. It's the total monetary value of the goods and services produced by that country over a specific period of time.
Economic development, on the other hand, is a broader term. It indicates an increase in citizens' quality of life and is often measured using the Human Development Index. This index considers intrinsic personal factors not considered in economic growth, such as literacy rates, life expectancy and poverty rates. The U.S. promotes both economic growth and development in many other countries through foreign aid programs, such as those focused on military aid or humanitarian relief.
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Back To CourseBusiness Law Textbook
23 chapters | 176 lessons