Economic Growth and its Importance for a Country

Running head: ECONOMIC GROWTH
Economic Growth
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ECONOMIC GROWTH2
Executive Summary
This report pertains to the discussion of economic growth and its effect and importance for a
country. It discussed the measuring procedures of economic growth and contributing factors
that drive the economic growth of the country. To understand economic growth in a broader
aspect, India and its economic growth factors have been considered and discussed
thoroughly. The concept of the Solow model has been used to understand the long run growth
status and the possibility of the Indian economy. The welfare side of the economic growth is
covered in the report, and it has been found that it has no inclusiveness in the development of
a country. Therefore, various aspect of economic growth is discussed in the report.

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Table of Contents
Introduction................................................................................................................................4
Economic Growth......................................................................................................................4
Economic Growth in India.........................................................................................................5
Key Factors Influencing Economic Growth..............................................................................7
Productivity............................................................................................................................7
Accumulation of Production Factors.....................................................................................7
Economic Growth Factors for India...........................................................................................8
Past.........................................................................................................................................8
Present....................................................................................................................................8
Future.....................................................................................................................................9
Analysis of Long-run Growth in Indian Economy – Solow......................................................9
Management of Economic Growth..........................................................................................10
Conclusion................................................................................................................................11
References................................................................................................................................12

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Introduction
The welfare of a country depends on the growth of its economic factors. Higher the
growth of economic drivers better will be the future of a country. Hence, it is important to
improve all the drivers of the economy to have positive economic growth as a whole.
Generally, economic growth is measured in terms of increase in real GDP of a country. This
report aims to discuss the concept of economic growth and why it is used to estimate the
growth of a country. Further, the report discusses the components and their influence on the
economic growth of a country. The positive and negative sides to determine the growth of a
country using the concept of economic growth is critically analysed concerning the case of
India in this context. The report discusses how the welfare of a country depends on economic
growth and try to find out the if there is any factor that economic growth misses out to
consider and analyses its importance in comparison to economic growth. Understanding all
the concepts and to have a broader view of this macroeconomic theory, data of the Indian
economy have been taken and analysed. Therefore, the report discusses economic growth in
terms of India.
Economic Growth
The economic growth of a country is measured in terms of real Gross Domestic
Product (GDP) growth. The real GDP of a country is a measure of inflation-adjusted GDP
(Krugman 2014). The adjustment is made by simply dividing the change in nominal GDP of
a country by the inflation or deflation rate. Hence, it is evident from the measurement of
economic growth that national income accounting has a significant influence over economic
growth (Goodwin et al. 2015). Thus, the components of economic growth are the same as
the components of GDP. The general components affecting economic growth are
consumption, investment or savings, export, imports, government expenditure, government