Comprehensive Report: International Trade and Economic Growth Dynamics

This report provides an analysis of international trade and its impact on economic growth. It begins by calculating growth rates and the time required to double GDP. The report then delves into the sources of human capital, including health, education, training, migration, and information, along with sources of labor productivity such as investment in labor and assets, and accountability. It also addresses the law of diminishing returns and discusses issues raised by government expansion. The report references key academic sources to support its analysis, offering a comprehensive overview of the factors influencing international trade and economic development.

INTERNATIONAL TRADE AND ECONOMIC GROWTH

Table of Contents
1.......................................................................................................................................................2
a. Calculate growth rate............................................................................................................2
b. Calculate years to double the Gross domestic product.........................................................2
2.......................................................................................................................................................2
Sources of human capital.............................................................................................................2
1. Health................................................................................................................................3
2. Education..........................................................................................................................3
3. Training.............................................................................................................................3
4. Migration...........................................................................................................................3
5. Information........................................................................................................................3
Sources of labor productivity.......................................................................................................3
1. Investment in labor............................................................................................................3
2. Accountability...................................................................................................................4
3. Investment in assets..........................................................................................................4
3.......................................................................................................................................................4
Law of diminishing returns..........................................................................................................4
4.......................................................................................................................................................5
Issues raised by government expansion.......................................................................................5
References........................................................................................................................................6

1.
a. Calculate growth rate
The growth rate is calculated by taking the difference between real GDP in 2013 and 2014 which
is, (0.2/13.1)*100 = 1.52%
Thus the growth rate is 1.52%.
b. Calculate years to double the Gross domestic product
26.2 = 13.1ert
= 2 = e0.015t
= log2 = 0.015t
= 0.30/0.015 = t
= 2 =t
Thus, it will take two years to convert GDP.
2.
Sources of human capital
The human capital is defined as the human resource that is working towards the benefits of the
economy or the organisation. The productivity of human resource increases with the good skills,
training and education. The productivity of human resources can be improved by investing in
human resource through providing training and education which directly impacts on the revenue

generation of the company. There are various sources of human capital, and they are explained
below:
1. Health
The healthy human resource contributes higher by regular attendance as compared to the
unhealthy employee. The healthy human resource works with more energy and motivation that
directly contributes towards the organizational goals (Murphy et al., 2014).
2. Education
The education helps to improve the productivity of employee by increasing the knowledge and
understanding of human resource which directly impact's on the contribution towards the human
resource.
3. Training
The training helps to improve the efficiency level of human resource which enables them to
work in an effective manner. It helps to gain the skills required to perform the particular job
which directly contributes towards the higher productivity.
4. Migration
The human resource migrated from one place to another in order to show their capabilities and
talent which contributes towards the organizational goals.
5. Information
The increase in awareness about the labour market from various source of information shows
that the value of labours is high.
Sources of labour productivity
The labour productivity is defined as the amount of goods and services produced by the labour within the
particular time period. The sources of labour productivity are explained below:

1. Investment in labour
The investment in labour by increasing their salary helps to increase the productivity of
labour which is a motivation in monetary terms. It enhances the productivity by satisfying the
monetary needs of labour which motivates them to work in a most efficient and effective
manner. For example, Increase the salary of an employee by $500 which increase the
productivity by $20,000.
2. Accountability
The increase in accountability of employee helps to increase the productivity of labour by
answering the status of every individual task. The accountability forces the labour to take
strategic decision and actions to improve the productivity within the particular time period.
3. Investment in assets
The investment in various assets such as a laptop, machinery and others which help to
increase the productivity of labour by providing machinery to work in a most efficient and
effective manner (Iommi et al., 2014). For example implementation of information
technology in the organisation improves the labour productivity by reducing the time for
calculating and developing manual reports.
3.
Law of diminishing returns
The law of diminishing returns states that in the process of productivity if one factor is
adding while other factors are constant that at some point the returns will start
diminishing. It does not imply that adding one factor leads to diminishing the returns
because it is called as negative returns (Real et al., 2013). It means that the marginal
product of a variable input starts decreasing by adding more variable inputs. For example,

the employer is employing the labour more and more which leads to falling the marginal
product of labour over the particular period of time. For example, the farmer is having
two acres of land and other sources of factor production include fertilizers, labour, water,
and seeds. In the short run, the fixed factor is land, and other factors are variable. Now
the farmer will employ labour which enables to improve the productivity, but after some
period of time, the marginal product of labour starts falling due to constant fixed factor in
the short run and indivisibility of the factor of production. Then the farmer will maximise
its productivity by utilising the fixed assets then the at some point the productivity starts
decreasing due to increasing in labour which creates disturbance in each other's work.
4.
Issues raised by government expansion
When the government raised taxes and uses the revenue to engage in spending’s then the
disposable income of an individual decrease due to paying the high tax within the
particular time period. The consumption level of an individual also decreases due to a
decrease in the level of spendings. Then the aggregate demand of goods and services in
the economy reduces which also reduces the profit margin of organizations. Then the
increase in tax revenue by the government increase the government spending's (Imam et
al., 2014). Thus the aggregate demand increases in the economy. The situation of
balancing the budget of the government arises in which the government spending's equal
to the tax revenue of government. The multiplier of a balanced budget of the government
is one.

References
Murphy, K. M., & Topel, R. H. (2014). Human Capital Investment, Inequality and Growth.
Journal of Labor Economics. Working Paper, (253), 39.
Iommi, M. (2014). Sources of Labor Productivity Growth in the EU and the US: the Role of
Intangible and ICT Capital (No. 14111). Dipartimento di Economia e Finanza, LUISS Guido
Carli.
Real, L. A. (2013). On Uncertainty and the Law of Diminishing Returns in. Limits to action: The
allocation of individual behavior, 37.
Imam, P. A., & Jacobs, D. (2014). Effect of corruption on tax revenues in the Middle East.
Review of Middle East Economics and Finance Rev. Middle East Econ. Fin., 10(1), 1-24.