Negative growth is associated with economic recession and economic depression. In order to compare per capita income across multiple countries, the statistics may be quoted in a single currency, based on either prevailing exchange rates or purchasing power parity. To compensate for changes in the value of money (inflation or deflation) the GDP or GNP is usually given in “real” or inflation adjusted, terms rather than the actual money figure compiled in a given year, which is called the nominal or current figure. The 4 Key Factors That Determine a Country’s Rate of Economic Grow
The economic growth of a nation determines how its production and export of goods and services affect national income and the standard of living. Strong economic growth requires strong domestic infrastructure and foreign relations. As shown by nations throughout human history, availability of natural resources, technological innovations, and a productive workforce all contribute to economic growth. In the 18th century, Great Britain’s Industrial Revolution provided a historical example of unprecedented economic growth, and similar factors can be seen globally today.
Natural Resources 1. The availability of natural resources allows a nation to produce material goods for its own use or foreign trade. Food crops qualify as a natural resource. A surplus of food allows citizens to take time away from food production and produce consumer goods–or act as consumers themselves. Non-food natural resources, such as mineral deposits, can contribute to economic growth by providing the material for technological innovation, the next factor in economic growth. During the Industrial Revolution, according to Steven Kreis, Ph.
D. , history professor for the American Public University System, England had a large supply of coal to use for energy to power machinery. Coal required no access to a water source. New crop rotation techniques provided greater soil efficiency. Today, an abundance of one of the most important natural resources, oil, is found in the Middle East. The Middle Eastern country of Qatar, for example, had the second-highest per capita income in 2010, according to the CIA World Factbook. Technological Innovations 2.
A critical aspect of economic growth, technological innovation allows inventors and producers to use existing technology to produce more food or goods in less time with less effort, thus enabling a higher rate of production. This, in turn, creates a surplus of goods. Technological innovation can refer to new methods of producing or preserving food, new types of machinery or more efficient energy sources to power machinery. According to the Charles Davidson College of Engineering, the invention of James Watt’s steam engine converted the burning of fuel to mechanical work. Population Growth . If a nation has abundant natural resources and the technology to use them, it can support a larger population. Population growth means more people will put money into an economy by buying necessities or commodities. According to the Economic History Site, England’s population grew from 7. 7 million people to 13. 2 million from 1791 to 1831, the height of the Industrial Revolution. However, unchecked population growth can have a negative effect on a nation’s economy when the number of people causes the demand for natural resources and goods to exceed the supply or ability to produce.
Today population outstrips natural resources in many parts of the world. According to “National Geographic,” 4. 8 billion people live in underdeveloped countries. A third of these people have no access to clean water because of overpopulation. Increased foreign investment 4. Foreign investment adds another source of income to a nation’s economic growth. Foreign investments can occur in the form of direct investment, with governments seeking to buy the rights to use technology or labor. They can also occur by trading.
The system of mercantilism, in which raw materials are bought from one nation, processed into a finished product and resold at a profit, existed between England and the American colonies. Middle East / West Asia |Country | % Growth |Date of information |World Rank |Continent Rank | |[pic] Qatar |13. 4% |2008 est. |3 |1 | |[pic] Iraq |9. 8% |2008 est. |11 |2 | |[pic] United Arab Emirates |8. % |2008 est. |15 |3 | |[pic] Kuwait |8. 1% |2008 est. |21 |4 | |[pic] Lebanon |8% |2008 est. |24 |5 | Qatar, also known as the State of Qatar or locally Dawlat Qa? ar, is an Arab emirate in the Middle East, occupying the small Qatar Peninsula on the northeasterly coast of the much larger Arabian Peninsula. It is bordered by Saudi Arabia to the south; otherwise the Persian Gulf surrounds the state.
A strait of the Persian Gulf separates Qatar from the nearby island nation of Bahrain. Qatar is an oil- and gas-rich nation, with the third largest gas reserves and the second highest GDP per capita in the world. An absolute monarchy, Qatar has been ruled by the al-Thani family since the mid-1800s and has since transformed itself from a poor British protectorate noted mainly for pearling into an independent state with significant oil and natural gas revenues. During the late 1980s and early 1990s, the Qatari economy was crippled by a continuous siphoning off of petroleum revenues by the Emir, who had ruled the country since 1972.
His son, the current Amir Hamad bin Khalifa al-Thani, overthrew him in a bloodless coup in 1995. In 2001, Qatar resolved its longstanding border disputes with both Bahrain and Saudi Arabia. Economic Growth in Qatar and reasons behind it: In Qatar, the International Monetary Fund (IMF) expects the gross domestic product (GDP) growth rate to reach – in constant rates – 18 percent in 2009 and 16. 4 percent in 2010, provided that it continues to grow at a slower pace to record 8. 9 percent in 2011 and 3. 3 percent in 2012 and onward.
The IMF also expects the inflation rate to decrease starting from 2009, from 15 percent in 2008 to 9 percent in 2009, 7. 5 percent in 2011, 6. 3 percent in 2012, 5. 3 percent in 2013 and 3 percent in 2014. You may ask about the reasons behind the growth of 18 percent in the GDP in 2009, although it is a hard year during which the global economy has witnessed a sharp contraction in demand, affecting the countries in the region. Moreover, why would the GDP grow at a slower pace in 2010, while the global economy would have overcome the consequences of the turmoil and the governmental policies would have fully met their intended purposes.
Shouldn’t the annual growth rate increase, and not decrease ? To answer this question, two factors must be considered : – The first is the leading role the public sector and Qatari Government are playing in the development of the economy and in the investment in fundamentals to reach the potential output, i. e. the total GDP that could be produced by the economy if all resources were fully employed. – The second is linked to growth, its grounds, and the means for its sustainability on both long and medium terms.
Multiple factors have made Qatar a high-profile leading economic power. The production and export of oil & gas helped the country achieving large budget surpluses and gave its economy a big push. Public investment plans have mainly contributed to the development of the general economic and financial situation, as the components of the economic activity witnessed unparalleled growth whether in industry, energy production, water distribution, construction, trade, tourism, transportation, telecommunication, financial & banking, real estate, insurance sectors, and other businesses.
This situation is called the “Big Push”. The term is usually used to describe an economy that shifts from one to another more advanced position through large investments in infrastructure, education, and private sector so it achieves a steady growth in both public and individual productivities. The push to Qatar’s economy, supported by bold investment plans and the increase in productivity, helped the country overcome the negative impacts of the global financial turmoil. This clears up the high growth rates despite the global economic difficulties.
The continued growth, even in lower rates, in 2012 is due to the fact that any economy that reaches its potential output would establish for its citizens a high-level of well-being, where the productivity would increase to reach a trigger point. Consequently, other factors would intervene to underpin the growth starting from the achieved level. What are these factors and how will they affect Qatar economy in the future? One: Demographic Growth and human capital – Economic growth is related to demographic growth. Demographic growth means ore consumption and more production. It contributes to the raise in demand of services and commodities on the long run and creates new economic opportunities through the multiplier, which consequently increase the profitability of companies and corporations. – Ibn Khadoun was the first to raise this point (in his Prolegomenon). Later on, in the twentieth century, an economic theory was born, which has adopted and documented this point of view. – According to the IMF, Qatar’s demographic growth will continue in the upcoming years and population will go beyond 2. million in 2014. This means that growth related to demography will continue. Two: Ongoing Economic liberalization The conclusion of commercial cooperation agreements, encouragement of foreign investments, and other agreements contribute to the establishment and sustainability of growth via trade exchanges, capital and good flows, and decrease of production costs by importing cost-effective products and efficient equipments. Three: Entrepreneurship Spirit of Qatari Investors
A credit goes to Joseph Schumpeter in the development of such concept that links entrepreneurship to creativity and dynamism in production and industry, leading to sustainable growth on the long run. This explains further the reason for which the growth of Qatar’s economy would continue on both medium and long terms, as a al khaliji, 8 December 2009, Dr Charbel Cordahi, Page 5 community that is active and bold in trade and business would always look for new means to increase its profitability and expand its business. Four: Saving
Saving is one of the most important reasons investment. If we look to the financial indicators in Qatar, we see that banks’ and external assets, along with private and public deposits, are increasing. Economists expect saving rates to keep their increasing trend in upcoming years, underpinning growth opportunities linked to investment and making the “continuous productivity growth” more reliable. Five: The Weather – Recent economic studies reveal that growth is related to warm climates. Statistics show large dependencies of weather and growth.
In Ancient History for example, the economic and cultural development was concentrated in Egypt. – Some economists go as far as to say that the growth periods witnessed by countries with cold weather are nothing but exceptions ! – In all events, whether the link between growth and weather is true or not, the other factors described above are real fundamentals for long term-growth, along with oil and gas reserves, including the liquefied natural gas which is considered as a source of green and clean energy to be greatly used worldwide in the future. References: Economic growth. ” Encyclop? dia Britannica. 2008. Encyclop? dia Britannica 2006 Ultimate Reference Suite DVD. 14 June 2008. • History Guide: Lecture 17: The Origins of the Industrial Revolution • San Jose State College: Davidson College of Engineering: The Cause of the Industrial Revolution • Economic History Society: Population Growth • Theodora: CIA World Factbook: Qatar • National Geographic: Effect of Overpopulation -https://www. cia. gov/library/publications/the-world-factbook/rankorder/2003rank. html -John Lockerbie (1998-06-06). “The population of Qatar”.