Economic Growth and Sustainable Development

This presentation explores the relationship between economic growth and sustainable development. It discusses the Solow and Malthusian models, capital accumulation, population dynamics, and policy recommendations. The focus is on understanding how different factors contribute to economic growth and how countries can achieve sustainable development.

Economic Growth and Sustainable Development
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INTRODUCTION
 The world is comprised of various types of economies
 In the theory of economic growth economies are categorized into
rich and poor country
 The difference between rich and poor can be seen with the help of
solow and malthusian model
 The poor can catch up with the rich economies with proper policy
recommendations

CAPITAL ACCUMULATION – SOLOW
MODEL
 Economic growth depends on population growth, savings and
capital investment
 In Solow model constant returns to scale exists
 More is capital investment and employed labour more will be the
growth (Meidner, Hedborg & Fond, 2017)
 For rich economies all the three factors remain constant and they
grow at a constant rate and reaches steady state growth

 Hence in long run growth rate of Canada slows and grows at a
constant rate
 In the case of poor countries there is abundant labour but low capital
 With increased in capital investment, capital to labour ration increases
and thereby will be faster economic growth
 Poor economies grows faster than rich economies
GDP Growth - Sri Lanka GDP Growth - Canada

 Poor economies catch up with the rich economies in the long run
 Countries with different savings rate reaches different level of steady state
growth paths (Van den Berg, 2016)
 Sri Lanka the poor country can catch up with Canada the rich country in
the long run if they share same rate of savings

POPULATION- MALTHUSIAN
MODEL
 For survival people need food
 More is the number of people more is the demand for food
 Population increases at geometric progression (Neurath, 2017)
 Food increases at arithmetic progression
 There will be imbalance between population and available food
 Theory of Malthus argues that balanced situation can be achieved by preventive
and positive checks

 People should make proper family planning and prevent the imbalance
 Positive check occurs by itself with high mortality rate due to poverty
and unavailability of food and population decreases faster leading to
balance between food and population
 Poor countries usually have faster population growth than rich
countries
 Sri Lanka might face population and food imbalance and fails to catch
up with Canada

HEALTH AND EDUCATION –
QUALITY OF LABOUR
 Better the health more a person can work efficiently
 Efficient work means less errors and more output
 Education on the other hand is complementary to health
 Greater the level of education more is the efficiency and more is
the return on capital invested
 Educational and health are the basic pillars of economic growth

TECHNOLOGY AND GOVERNANCE
 Technology increase return on capital and improves efficiency of human capital
(Goldin, 2016)
 Innovation should be balanced paced otherwise too fast replacement of technology
brings capital burden
 Governance and policy should be such that it restricts factors to grow that hinders
economic growth
 Policies should focus on increasing capital formation, education and health and
restricts over consumption and unwanted population growth

POLICY RECOMMENDATION
 Investment in education and health sector to improve human
capital
 Creating awareness among people to control population by active
family planning such that balance between demand and supply
persists

CONCLUSION
 Sri Lanka is the poor country and it grows faster than Canada
 It is likely that Sri Lanka catches up with Canada in the long run
 Investment in education and health sector is needed for Sri Lanka
 With greater human capital, controlled population and significant
amount of savings Sri Lanka will become as much rich as Canada

REFERENCES
Goldin, C. (2016). Human capital. Handbook of cliometrics, 55-86.
Meidner, R., Hedborg, A., & Fond, G. (2017). Employee investment funds: An approach
to collective capital formation. Routledge.
Neurath, P. (2017). From Malthus to the Club of Rome and Back: problems of limits to
growth, population control and migrations. Routledge.
Van den Berg, H. (2016). Economic growth and development. World Scientific Publishing
Company.