Economic Growth and Sustainable Development

Running Head: ECONOMIC GROWTH AND SUSTAINABLE DEVELOPMENT1
Economic Growth and Sustainable Development
Name
Affiliation
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ECONOMIC GROWTH AND SUSTAINABLE DEVELOPMENT 2
Introduction
The aim of this paper is to collect, compare and contrast economic data of two countries
(one rich and one poor). In this case, the selected countries include; Nigeria (poor country) and
China (rich country). Nigeria's Gross Domestic Product grew by 1.9 percent in 2018 as
compared to the previous years. Nigeria's GDP growth in 2018 was 11th to 10th as more than
that of 2017. In addition, the country's Gross Domestic Product figure was US$ 397,270 million
in 2018 (Onuba and Ifeanyi, 2015). This implies that the country's Gross Domestic Product rose
by US$20, 909 million in 2018 compared to 2017. Nigeria's Gross Domestic Product per capita
was US$ 2,081 in 2018 higher than in 2017 ($109). The high growth of the country's growth
interesting which requires reviewing other previous years like 2008 where the country's Gross
Domestic Product was US$ 2,234. On the other hand, China's GDP in 2017 was worth US$
12237.70 billion. The Gross Domestic Product of the country represents at least 19.7% of the
global economy. The average Gross Domestic Product of China was US$1970.49 billion since
1960. In 2017, the country's GDP increased up to US$ 122237.70 billion. As compared to the
past years, China's Gross Domestic Product grew by 1.4 percent (Onuba and Ifeanyi, 2015).
Figure one: Comparison of Nigeria's and China's GDP per capita (US Dollars)

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
0
2000
4000
6000
8000
10000
12000
GDP per capita
Nigeria China
Year
GDP per capita (US Dollars)
The line graph above compares the Gross Domestic Product per capita of Nigeria and
China from 2008 to 2018. The graph indicates that China’s GDP was higher as compared to
Nigeria. The graph indicates the variation in the countries’ GDP per capita in Us dollars.
2. Theory Format:
This section explains the various factors that may contribute to the economic growth and
difference in the Gross Domestic Product per Capita between China and Nigeria. The factors
include the following;
Capital, this factor can best be explained with the help of the Solow model which
indicates that economic growth results from increased capital that improves the factors of
production. In addition, the theory explains that the economic growth of a nation resulted from
investment and saving that lead to more accumulation of capital by the country. In addition,
increased capital is considered as a major factor for improving production by ensuring efficiency.
The model aims at illustrating the role played by Capital towards the economic growth of the

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country and leading to a difference in GDP per capita between China and Nigeria (Huang, &
Xie, 2013). The model assumes that "output is produced using a production function in which
output depends upon capital and labor inputs as well as a technological efficiency parameter."
However Slow Model also assumes that "there are diminishing marginal returns to capital
accumulation." In other words, the model indicates that increased capital provides a relatively
smaller increase in output (Irwin, 2016). Also, the model indicates that if any firm gets extra
capital, it will be in the position to obtain the increased output. However, the model assumes that
if the firm increases its capital minus increasing the number of workers, the increased output may
not be obtained. The model does not aim at modeling the decision of consumption-saving but it
assumes that people save a given normal fraction of their salary or income. Further, the model
illustrates that if savings are equal to the investment, the output is constant with investment.
Also, the model illustrates that MP of additional capital investment may decline in the long run
leading to a decline in the country's Gross Domestic Product. The model illustrates that the
economic growth of a country is obtained by adding more labor inputs and capital. Therefore,
this implies that if a given country invests in more capital as compared to the other, it will be in
the position to obtain a high GDP per capita as compared to another country. Also, the theory
implies that a country which invests in more capital attains economic growth as compared to
countries which are not in the position to make capital investments (Yao et al, 2013).

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Figure two: Solow model of Output and capital
Source: http://www.karlwhelan.com/Macro2/Notes9.pdf
Explanation: the figure above indicates that investment an increase in the capital leads to
a shift in the level of investment. In addition, the figure indicates capital is associated with more
investment leading to the shift in the investment curve upwards from sy (green) line to Y (red)
line. From the current capital level k1, capital investment exceeds depreciation. This implies that
the country's capital stock begins to increase. This proceeds until capital marks to new
equilibrium rates of k2.
Population, these factors can be explained or analyzed with the help of the Malthusian
Theory. The theory is important for exponential growth relative to the idea of on which a given
function grows. The model is always used in the population ecology theory as the major
principle of "population dynamics." The theory was published by 'Thomas Robert Malthus' who
thought that by using positive checks and preventive checks, the population of a given country

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would be in the position to control the balance of food supply according to the level of
population. Thomas Malthus indicated that population grows in "geometric progression." The
model also indicates that before the emergence of the industrial revolution, people's standards of
living differed over a given period of time across various countries. Also, the theory indicates
that after the industrial revolution, the per capita income of different countries grew among rich
countries. This implies that there is a positive correlation between population and investment
across the countries. Therefore, countries with a low population face a problem of reduced labor
force hence hindering the growth of Gross Domestic Product per capita of such countries. This
implies that the countries have a negative relation between the output of the workers and the
population growth across poor countries. The theory also indicates that an advance in technology
will increase a nation's population without changes in the standards of living of the people. As a
result of increased population growth, the country's GDP per capita grows. The theory also
indicates that if the population grows, consumption increases leading to economic development
(Kerr et al, 2016).
Figure three: Malthusian model