Economic Growth and Sustainable Development

Running head: Economic growth and sustainable development
ECONOMIC GROWTH AND SUSTAINABLE DEVELOPMENT
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Economic growth and sustainable development
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Table of Contents
Introduction................................................................................................................................3
Theoretical Overview.................................................................................................................4
Application of modern theories..................................................................................................8
Recommendation......................................................................................................................13
Conclusion................................................................................................................................15
Reference list............................................................................................................................17

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Introduction
The term sustainable development is closely related with the economic growth of any
country. The term economic growth considers the growth in the GDP, reduction in the
population, increase in the capital level, and improvement in technologies. Most of developed
nations like Australia, Italy, Austria and other countries are increasing their production rate
so that the sustainable development is possible to bring in. The main aim of this study is to
identify the economic components and has taken Italy as the richest country and Tanzania as
the poorest country. Through the analysis of the economic component the study will identify
the development and application of various economic theories such as Solow growth model,
growth of population taking Malthusian model, the impact of government intervention and
the consequences of upgraded technologies on the production rate. The study will also
identify various social and environmental issues that are closely related with the economic
growth. The identification will help in the development of government policies that will not
only increase the future growth of economy but will also indulge in better sustainability. The
economic growth analysis of the above mentioned countries will help the study in applying
the theories taking realistic examples.
Application of modern theories like Solow growth will determine the pros and cons of
Solow growth model and how the above-mentioned countries are incorporating the growth
rate and the technology rate and the capital growth. Through the incorporation of the capital
and technology growth rate the economy of the above mentioned countries will allow the
improvement in the production rate. The Study will incorporate the Solow model and will try
to identify the fact that are affecting the development of capital and technology at the rate of
n+g. On the other hand, the introduction of Malthusian theory, the study will allow the study
to identify the effects of population growth on the growth of economy. Through the
sustainability of economic growth, the economy of Italy and Tanzania will allow the resource

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development. This will identify the future aspects of the economic growth and economic
sustainability that will not only induce development in the development but also
channelization will increase. Taking the help of various government articles and journals, the
study will analyse the data for last 20 years and will identify the impact of key variables like
GDP per capita and expenditure on health and education by the people living in the above
mentioned countries in order to increase the quality of labour force.
Part A: Theoretical Overview
Taking into consideration the theoretical approaches and theoretical overview it will
be easy for the study to highlight the incorporation of applications. Considering the theories
like Solow growth will allow the study to identify the growth of the economy.
Solow growth model
The Solow growth models shows the relationship among output Y, capital (K) and
technology (A). The mathematical relationship is claiming the relationship as Y=Af (K). Now
this is one of the important aspects in the sense that country Italy and Tanzania will be able to
identify the base of resources.
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
0.000
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
Capital formation
Capital formation Italy Capital formation Tanzania

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Figure 1: Gross capital formation of Italy and Tanzania
(Source: Gross capital formation (% of GDP), 2019)
The above diagram is showing the fact that gross capital formation of Tanzania is
more compared to Italy during the period of 1995-2017. The huge growth of capital in the
economy of Tanzania is mainly because of huge rate of growth in the mining industry. The
Diamond is one of the mineral in South Africa that is actually creating demand and supply of
whole economy (Abel, Barakat, Samir & Lutz, 2016). On the other hand, the major concept
of the Solow model is the growth of economy through technology and capital. According to
the report published by the World Bank, the new Tanzanian government is mainly looking to
increase the investment on the infrastructure and curbing corruption. The growth rate of
Tanzania is high and yet it failed to accelerate the job market (Assembly, 2015). Even the
poverty rate is too high in the Tanzania and even about 12 million Tanzanian are living well
below the poverty level and every year 800,000 young graduates are entering the job market
every year. Taking the help of the Solow Growth model, the economy of Tanzania is mainly
looking to increase the capital growth rate that will increase both human and capital
resources.
Malthusian population theory
The theory of population was penned by Malthus in the year back in 1979 and some
of the modifications were made in 1803. The main agenda of this theory is that the food
production grows at the arithmetic progress and the population grows at the rate of GP. This
is one of the important aspect for both rich and poorest country in the sense that population
growth have a significant impact on the capital growth of the economy (Costanza et al.
2016). Moreover, keeping this theory in mind, the both rich and poor country like Italy and
Tanzania will be looking to minimise the population pressure. Both the country will be

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aiming to take government intervention in order to increase the population control measures.
Through the incorporation of better improvement in the growth of the capital, the level of
investment will definitely increase. This increased level of investment is going to increase the
job opportunity that will increase the rate of migration of labourers from rural to urban areas.
Most of the developed nations like Italy will stop the growth rate of the population because of
the fact that the main focus of the economy is to increase per capita income and per capita
level of consumption of the country (Gupta & Vegelin, 2016).
Figure 2: Malthusian model
(Source: Created by Author)
This will increase the development of resources and will increase the internal demand
of the economy. Through the improvement in the government intervention, the poorest
economy will be having better opportunity to grow and develop. On the other hand, it is
important for the economy to indulge in strong rules and regulations that will not only
increase the channelization of resources but will also increase the resource allocation.