Good Essay On Economics
The growth rate of countries is determined by different aspects of trade and development. One of the most important aspects of economic growth is the size of a country in comparison to the amount of income it can produce. The economic growth rate does not look narrowly at the amounts produced, but also at the section of the population that contributes to the production of wealth in the country. In this case, some countries may exhibit a large number of people in the wealthiest class but have a low GDP.
Japan has the third largest automobile and electronics industry in the world. It has sufficiently experienced a growth in GDP over the last twenty years as a result of its industrialization and competitiveness in the export industry. Even in such a position, Japan is currently experiencing a growth rate of about 0.60 percent, which is comparatively low as compared to Ethiopia, USA, and China. The United States has currently registered a growth rate of 2.20 percent while China’s growth rate is at 7.40 percent. Ethiopia has registered a GDP of 10.40 percent, meaning that it is the country that is performing best in economic growth among the other three (Fensom, 2015).
Average Growth Rates over the last 20 Years
The average growth rates for these nations over the last twenty years were as follows: United States had an average GDP growth rate of 2.4; Japan had 0.87; Ethiopia had 7.4; whereas China had an average GDP of 7.4.
Differences in the countries that have led to Their Different Growth Rates
The growth of the economy is established by both the industrial developments as well as the ability of the country to reduce poverty. China has had the highest poverty reduction over the last twenty years, as compared to the other three countries. The United States has had several dominant industries, but the gap between the wealthy and the poor has always been distinct, thus affecting the GDP of the country (Fensom, 2015). There are three types of poverty that affect the growth rate of a country: knowledge poverty, income poverty, and humanity poverty. Economic development means poverty reduction, thus macroeconomic policies in countries that exhibit a high GDP prove that the said country works towards countering income poverty. Other factors that affect the growth rate of countries include: the rate of unemployment; infrastructural development; corruption; governance and the rule of law; education and health; external and internal balances as well as globalization.
Distinct Government Policies
Some of the distinct and important government policies that these countries have relied upon over these twenty years are outlined as follows: United States of America has, first of all, adopted tax cuts by lowering tax rates over the years. The essence of this is that when tax rates are lowered the economic growth rate rises since the richer are taxed more than the poor, whose living standards will in turn increase (Fensom, 2015). The American government has also treated the economy with utmost care over the years by ensuring that all other policies in the country, such as healthcare and foreign policy, are aimed at improving the overall outlook of the economy.
One of the policies that China has relied upon to build its economy is the promotion of its technology industry, which is one of the biggest contributors to its success story. China has also put in place measures to ensure that the domestic industries are given priority over foreign entities by the government. Ethiopia’s success has been attributed to the emphasis on the agricultural sector that contributes to over 46% of the economy (Fensom, 2015). They have also ensured that foreign trade is empowered by putting in place favorable conditions. Japan’s success is mainly attributed to putting in place policies aimed at empowering its innovation sector and also ensuring that the labor force receives the most favorable terms to increase productivity. Conclusively, the growth rate of a country is attributed to interrelate in government policies and the reduction of poverty.
Fensom, A. (2015, January 21). IMF: India to Take Growth Lead | The Diplomat. Retrieved from http://thediplomat.com/2015/01/imf-india-to-take-growth-lead/