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Public’s Positive Economic Ratings Slip; Inflation Still Widely Viewed as Major Problem

1. views of the nation’s economy, table of contents.

• Views of top problems facing the nation
• Americans’ views of the state of the nation
• Similar shares in both parties view personal financial situation positively
• Americans’ views on the future of the economy and their financial situation
• Changes in views of the country’s top problems
• Acknowledgments
• The American Trends Panel survey methodology

Fewer than a quarter of Americans (23%) currently rate the country’s economic conditions as excellent or good, while 36% say they are poor and about four-in-ten (41%) view conditions as “only fair.”

While positive ratings of the economy have slowly climbed since the summer of 2022, there has been a slight drop  since the start of the year – when 28% rated economic conditions as excellent or good.

This change has been largely driven by Democrats and Democratic leaners: In January of this year, 44% of Democrats rated the economy positively, compared with 37% now.

Still, ratings among Democrats remain higher than they were last year.

Views among Republicans and GOP leaners remain negative: Just one-in-ten rate economic conditions as excellent or good, while half say they are poor and another four-in-ten view them as “only fair.”

Views of the nation’s economy have long been partisan.

• Republicans expressed far more positive views of the economy than did Democrats throughout most of Donald Trump’s presidency.
• Democrats have been consistently more likely than Republicans to rate conditions as excellent or good during Biden’s presidency. However, their ratings have been far less positive than Republicans’ ratings of the economy were when Trump was president. 

There also are wide differences in views of the economy by age and race and ethnicity – especially among Democrats.

Age, race and ethnicity

As in the past, Democrats under age 50 express much less positive views of the nation’s economy than do Democrats 50 and older:

• Just 21% of Democrats under 30 rate economic conditions positively, as do 29% of those 30 to 49.
• By contrast, nearly half of Democrats ages 50 to 64 (47%) and a majority of those 65 and older (55%) say conditions are excellent or good.

However, since January there has been a steeper decline in positive views among Democrats 65 and older (from 70% to 55%) than among Democrats in younger age groups.

Republicans are much less likely to view current economic conditions in positive terms across age groups.

There are also significant differences among Democrats by race and ethnicity. White Democrats are more likely than Black, Hispanic and Asian Democrats to rate the economy positively. However, ratings have dropped across these groups since January.

Views of personal finances and national economic ratings

As might be expected, those who rate their personal finances positively also are more likely to rate national economic conditions as excellent or good.

Among the roughly four-in-ten Americans (41%) who rate their own finances positively, 40% rate the national economy positively. Among those who say their finances are only fair or poor, far fewer say national economic conditions are excellent or good (14% among only fair, 6% among poor).

However, partisanship is a factor here as well. Among Democrats who have a positive evaluation of their finances, 58% rate economic conditions positively. That compares with just 19% of Republicans who give similarly positive ratings of their financial situation.

Overall, personal financial ratings have fluctuated less dramatically than national ratings.

However, the share of Americans who rate their personal finances as excellent or good declined from about 50% in 2021 to about 40% in 2022 and has remained at about that level since then.

About four-in-ten say their financial situation is in excellent or good shape (41%), while a similar share say their situation is in “only fair” shape (39%). Another 19% say their situation is in poor shape.

Americans’ ratings of their personal finances are considerably less partisan than their views of the nation’s economy. Roughly four-in-ten Democrats (44%) say their financial situation is in excellent or good shape.

When asked for their expectations of the country’s economic conditions a year from now, 43% of Americans say they expect it to be about the same as it currently is. About a quarter (24%) say they expect the economy will be better a year from now, and nearly a third (32%) expect conditions to worsen.

And when asked for their expectations of their own family’s financial situation a year from now, 49% of adults say they expect it to be about the same. Roughly a third (34%) say they expect their financial situation will be better a year from now, and 16% expect their situation to worsen.

The shares of the public who expect economic conditions to worsen on either a national level or personal level is smaller than in recent years .

Among partisans, similar shares expect economic conditions of the country to be better a year from now (23% of Republicans, 26% of Democrats). However, a larger share of Republicans than Democrats expect the country’s economic conditions to worsen (38% vs. 25%).

Republicans remain less hopeful than Democrats about the future of their personal financial situation. About three-in-ten Republicans (29%) say their family’s personal finances will be better a year from now, compared with 39% of Democrats who say the same. And twice as many Republicans as Democrats say they expect their own financial situation to worsen (22% vs. 11%).

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Economics has a long history of many differing theories and ideas. These economic theories and studies have influenced the economies of many different countries. This explanation of the national economy will take a trip down the history of economics to explain the national economy. Interested? Follow along!

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Milton Friedman was an economist and statistician.

What branch of economics did Friedman start?

What is the difference between Monetarist economics and Keynesian economics?

Define the national economy.

What are some goals an economy might have?

Define supply-side economics.

What are some characteristics of a national economy?

Who is known as the father of Economics?

Which US president was an advocate for supply-side economics?

What did Adam Smith believe?

What was the quote that Reagan used to explain the supply side economic theory?

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• Aggregate Supply and Demand
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Aggregate Demand

Aggregate demand curve.

• Aggregate Expenditures Model

Aggregate Supply

• Long Run Aggregate Supply
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Macroeconomic Equilibrium

• Short Run Aggregate Supply
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• National Income

What is National Economy?

A national economy is the production, distribution and trade, consumption of goods and services by different agents of a nation. The national economy in a global context is primarily about macroeconomics. But microeconomic principles do influence the behaviour of the macroeconomy.

The main functions of a national economy are related to the production and consumption of goods and services. A national economy has goals and characteristics that allow it to function properly. However, these may be different from nation to nation. Let’s look at some of these goals and the general characteristics of a national economy.

A national economy is the production, distribution and trade, consumption of goods and services by different agents of a nation.

Goals and Characteristics of a National Economy

Every country wants its economy to be successful. Thus, each nation has different goals that will ensure the success and stability of its national economy. Some goals an economy might have are:

• Efficiency.
• Economic freedom.
• Economic growth .
• Full employment.
• Price stability

You can learn more about these goals in more detail by checking out these articles: Economic Growth , Inflation and Deflation , and Unemployment .

In addition to goals, every economy has its own distinguishing features and characteristics.

The US economy is known for being the largest economy in the world and for having an advanced technological services sector that plays a very important role. The UK’s economy is known for its diversity: financial services, construction, tourism, etc., all play a part in the UK’s economy. The Japanese economy is known for its manufacturing sector: it's often viewed as an economy that is ‘well into the future’.

These distinguishing features could be based on the natural resources a country might have in abundance, like diamonds or gold. They could be based on what a country trades with other countries. They could also be based on the quality of their education systems or financial systems. Whatever it might be, each economy will have different characteristics.

However, there are a few characteristics most national economies might have in common. Some of these include:

• Open economy . This relates to an economy that is open to selling and buying goods and services in global markets. Essentially, the economy is open to free trade .

Most countries have an open economy. Examples are the US, UK, France, Spain, and Norway.

• Closed economy . This relates to an economy that is not open to selling and buying goods and services in global markets. They do not trade with any outside economy.

Not many countries are closed economies because raw materials like oil play a huge role in the global economy. However, there are a few countries like North Korea that trade very little with other countries. This is mainly due to the numerous sanctions imposed on this country.

• Free market economy . This refers to an economy where the prices and distribution of goods and services are determined by supply and demand with little government intervention.

New Zealand, Singapore, and the US are examples of countries with a free market economy.

• Command economy . T his refers to an economy where the allocation of goods and services, the rule of law, and all economic activity is controlled by the government.

The economies of North Korea and the former Soviet Union are examples of a command economy.

• Mixed economy . This is an economy that mixes both free-market and command economy characteristics. It combines both aspects of capitalism and socialism.

Germany, Iceland, Sweden, and France are a few examples of countries with mixed economies.

History of the Modern Economy: Theories and Developments

How did each of the countries in our previous examples decide to shape their national economy? Let's take a blast to the past!

National economies before the eighteenth century weren’t classified and differentiated like we do today. Each country had their own system and methods of trade and other financial transfers. It wasn’t until the mid-eighteenth century that the father of economics , Adam Smith, expanded on the studies of French physiocrats, notably Quesnay and Mirabeau, to argue for the free market economy.

In his famous book, The Wealth of Nations (1776), he argued that the invisible hand would create social and economic prosperity for all if there was little government interference.

Keynesian Era

Adam Smith's theories were dominant in economics for a long time, but they also had many critics. One of these critics was John Maynard Keynes.

John Maynard Keynes was a British economist. He believed that free-market capitalism is unstable and strongly supported government intervention. He believed that the government is in a better position to bring about good economic performance than the market forces.

In his book, The General Theory of Employment, Interest, and Money (1936), Keynes argued that by influencing aggregate demand by means of government policies, the UK could achieve full employment alongside optimal economic performance.

He proposed these ideas during the Great Depression and he was met with criticism from the British government. At the time, the British economy was experiencing a period of serious economic downturn. The government had increased welfare spending but had also raised taxes.

Keynes argued that this wouldn’t encourage consumption. Rather, he argued that if the government were to stimulate the economy, they needed to increase government spending and cut taxes, as this would lead to an increase in consumer demand and the overall economic activity in Britain.

However, by the end of the 1940s, Keynesian economics became more popular and soon many nations adopted his ideology. The only significant parts of the world that had rejected Keynesian principles were the communist nations. Economic historians label the years from about 1951 to 1973 as the 'Age of Keynes'.

The Free-Market Revolution

Keynes' beliefs were later met with disagreements from some other economists, namely Fredrick von Hayek and Milton Friedman.

Hayek was a firm believer in the free market and didn’t like socialism. His arguments were based on economic foundations, but he also used politics and ethics. For example, in his book The Constitution of Liberty (1960), Hayek argued that a free market system - that is protected with strong constitutions and laws, and well-defined and enforced property rights,- will allow individuals to pursue their own values and make the best use of their knowledge.

Milton Friedman started his campaign against Keynesian theories in 1957 with his book A Theory of the Consumption Function . Keynes’ model supported short-term solutions, like tax breaks, to increase consumer spending. His idea was that the government can increase economic activity without trading off future tax revenues - essentially, the government was able to have its cake (high economic growth and activity) and eat it (maintain tax revenues).

However, Friedman showed that individuals change their spending habits when real changes occur rather than temporary ones. Therefore, individuals and families would respond to changes like an income rise rather than a short term, temporary change like a stimulus check or a tax break.

Friedman wasn’t just an economist, but also a statistician. His arguments often were based on analysing empirical data and evidence, something Keynes rarely did. Because of that, Friedman could show the holes in Keynes’ frameworks and assumptions with data.

Friedman’s economic theories, beliefs, and views were in direct opposition to Keynes’. They started another branch of economics: monetarist economics.

The key difference between these theories is that monetarist economics involves the control of money in the economy, while Keynesian economics involves government spending . Monetarists believe that if the supply of money flowing into an economy is controlled, then the rest of the market can fix itself.

Monetary economics studies the different theories of money and examines the effects of monetary systems and policies. You can learn more about this in our Money Market and Monetary Policy articles.

Supply-Side Economics

The debate between no government intervention and government intervention would continue throughout the years. By the time Ronald Reagan became president of the US in 1981, a new form of economics had arisen: supply-side economics .

Supply-side economics, also known as Reaganomics, is the economic theory that suggests that tax cuts for the wealthy would result in increased savings and investment capacity for them that trickle down to the overall economy.

The idea is that tax cuts for wealthy investors, entrepreneurs, etc. will provide them with a greater incentive to save and invest. Their investments will then ‘trickle down’ to the wider national economy and produce economic benefits for all. Reagan often said ‘a rising tide lifts all boats’ to explain this theory.

What to learn more about supply-side economics? StudySmarter has got you covered! Check out our Supply-Side Policies explanation.

Present-Day Economics

Today, there are many branches and competing views of economics: behavioural economics, neoclassical economics, Keynesian economics, Monetary economics, and the list goes on.

Nation economies today, though don't need economic theories to account for resources, the allocation of goods, and services, for example, because they are already being accounted for in economic systems. Economic theory today is also much more mathematical and contains a lot of statistics and computational modelling than ever before.

Structure of a National Economy

StudySmarter has many explanations that will help you learn more about the national economy whether it's for personal interest or for your exams. Let's take a sneak peek at what you can expect.

Aggregate demand is one fundamental concept in macroeconomics. It is essential for any economy. In our Aggregate Demand explanation, you will learn what it is and its components.

Our Aggregate Demand Curve will take your understanding of aggregate demand one step further. You will see how aggregate demand can be shown graphically and what factors will cause a movement along the curve or a shift of the curve (Look at Figures 4 and 5) . You will also learn two important concepts: the multiplier effect and the accelerator theory.

Aggregate supply is linked closely to aggregate demand. It is also another fundamental concept in macroeconomics. You will understand the difference between the short-run and long-run aggregate supply curves, how to draw them (Look at Figure 6), and the factors that determine aggregate supply.

Our explanation of Macroeconomic Equilibrium will take what you have learned about aggregate demand and aggregate supply, and combine them.

Circular Flow of Income

Our Circular Flow of Income explanation will take a look at open and closed economies in more detail. You will look at four circular flow (look at Figure 7) models in depth and at the end, you will be able to determine what model describes your country's economy best.

National Economy - Key Takeaways

The national economy refers to the production, distribution and trade, consumption of goods and services by different agents of a nation.

• Every country wants its economy to be successful, so each nation would have different goals that will ensure the success and stability of its national economy.
• Every economy has its own distinguishing features and characteristics.
• Adam Smith is known as the father of economics. He believed that the invisible hand would create social and economic prosperity for all if there was little government interference.
• John Maynard Keynes was a British economist, who believed that free-market capitalism is unstable and strongly supported government intervention.
• Fredrick von Hayek and Milton Friedman opposed Keynesian economics and based their arguments on empirical data and evidence.

Flashcards in National Economy 53

Monetarist economics

The key difference between these theories is that monetarist economics involves the control of money in the economy, while Keynesian economics involves government spending. Monetarists believe that if the supply of money flowing into an economy is controlled, then the rest of the market can fix itself.

Some goals an economy might have are:

• Economic growth.
• Price stability.

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Frequently Asked Questions about National Economy

What is the national economy?

What are national economy objectives?

Each economy has four main objectives:

• Low and stable inflation.
• Low unemployment.
• Balanced balance of payments.

Other objectives a national economy might have are:

What is the importance of the national economy?

The national economy is important because it gives economists, governments and individuals a gauge of each nation’s economic development. Understanding the national economy can help a nation when they experience an economic crisis/downturn and make the necessary adjustments to stimulate economic growth and economic activity.

What are the factors that affect a nation's economy?

There are many factors that affect a nation's economy. Some of these factors include:

Human resources

Physical capital

Natural resources

Infrastructure

Level of investment

What are the major elements of the national economy?

The major elements of the national economy are: 

Territory/region

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The initial response to Keynes' ideas was positive.

The businesses and the individuals are the two groups that interact in the diagram.

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Globalization and National Economies

• Maleeha Sattar
• March 19, 2024
• CSS , CSS Essays , CSS Solved Essays
• 37102 Views

CSS 2024 Solved Essay | Globalization and National Economies

Maleeha Sattar, a Sir Syed Kazim Ali student, has attempted the CSS 2024 essay “Globalization and National Economies” on the given pattern, which Sir  Syed Kazim Ali  teaches his students. Sir Syed Kazim Ali has been Pakistan’s top English writing and CSS, PMS essay and precis coach with the highest success rate of his students. The essay is uploaded to help other competitive aspirants learn and practice essay writing techniques and patterns to qualify for the essay paper.

1-Introduction

• ✓ Thesis Statement

Despite concerns over power imbalances and cultural erosion at the hands of developed nations in the globalized world, the significant economic growth, technological advancements, and capacity-building facilitated by globalization have overwhelmingly benefited developing countries’ national economies, outweighing any negative consequences.

2-Deciphering the term ‘Globalization’ and its features

• ✓ Understanding the meaning of Globalization from an economic perspective and the chain of economic trends in a globalizing world
• Interdependence, Integration, Time-compression, and Diffusion

3-Understanding the term ‘National Economies’ and the goals and characteristics attached to it

• ✓ Defining national economies
• Efficiency, equity, economic freedom and growth, and employment and price stability

4-Ripple effect of globalization trends on national economies: A current scenario

• Case in Point: Russia reforming its energy policies after the Russian-Ukraine war
• Case in Point: US’s ‘China plus 1’ strategy, China’s face towards other emerging markets and its role in BRICS, and their close allies’ ever-increasing shares with the rival blocs, prominent examples

5-How has globalization promoted the developing countries’ national economies?

• Case in Point: The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a clear manifestation of the case
• Case in Point: Countries with low tax jurisdictions, Singapore and the Netherlands, have ranked at 98.38 and 95.98 per cent in the Investor Friendliness Index (2022), further increasing the FDI opportunities for them
• Case in Point: Containerization has revolutionized the flow of goods just as the computer revolutionized the flow of information. (The New York Times)
• Case in Point: Mexico’s automotive industry under the United States-Mexico-Canada Agreement (UMSCA)
• Case in Point: Indonesia managed USD 10.46 billion in foreign exchange earnings from tourism during the quarter of the year 2023, witnessing a strong rebound in its sector despite the challenges posed by the pandemic. (Indonesia Investments)
• Case in Point: India’s initiatives like Make in India and Startup India have encouraged local entrepreneurs to transform India into a global manufacturing hub and create jobs for locals, too
• Case in Point: Vietnam and Colombia have learned from the Dutch model and implemented Integrated Pest Management (IPM) strategies to minimize their chemical inputs and protect crops
• Case in Point: China’s e-commerce platforms, such as Alibaba and JD. Com, make trading more accessible and faster

6-On what grounds do opponents argue that globalization is controlled by developed countries rather than promoting their economies?

• Evidence: The World Trade Organization (WTO) allows all member states to voice their concerns and seek fair trade practices.
• Evidence: UNESCO’s Intangible Cultural Heritage advocates for the safety of traditional cultural practices worldwide.

7-How can globalization further integrate the growth of national economies in the upcoming years?

• ✓ To implement the multidimensional framework to access national economic performance and growth quality
• ✓ To shift towards more sustainable growth models
• ✓ To invest in physical and digital infrastructure to boost productivity and connectivity

8-Critical Analysis

9-Conclusion

The world has become more interconnected today than ever since the Industrial Revolution, with information transferring across continents in seconds and goods crossing oceans effortlessly. Indeed, it is the essence of globalization, resulting from nations’, businesses’, and people’s interactions on the global stage. Economically, it is a grand marketplace where different national economies participate and flow their goods, services, and capital freely. And while globalization has uplifted developing countries by fostering economic growth, technological advancements, and capacity-building, it’s not always a harmonious dance. Despite concerns over power imbalances and cultural erosion at the hands of developed nations in the globalized world, the significant economic growth, technological advancements, and capacity-building facilitated by globalization have overwhelmingly benefited developing countries’ national economies, outweighing any negative consequences. For example, amid geopolitical tensions, developing states have opted for plausible alternatives, like reforming local industries and diversifying customers, to continue the development process. Besides this, free trade agreements, containerization, tourism industries, and the introduction of innovative technologies have already made developing economies more integrated and diffuse. This essay throws light on the maxim of how globalization has promoted developing countries’ national economies.

Delving into the understanding of the term globalization from the economic perspective before understanding the national economies concept, it is the increased interconnectedness of all countries and people, making the globe a large village where borders are open for the speedy flow of goods, services, information, finance, ideas, and much more. Due to this phenomenon, the national and international bodies regulate their policies and relations depending on the prevailing globalization wave, working as a cradle for new economic trends to breathe. According to the changing time-frames, this oscillating phenomenon has slowly integrated the world, but with the experience of different economic practices from the old-archaic economic mercantilism to the current economic liberalism. Further, the definition of the broad concept varies from domain to domain, but its progressive process revolves around similar features. The people enjoy interdependence, integration, time compression, and diffusion with less government intervention but under their watchdog eye. As these new ventures unfold for people every coming day, people assume assimilation of their traditions and cultures too, thus making people-to-people contact for building trust and starting new businesses not an arduous task for everyone. 

Debunking the national economies concept, it encapsulates nations’ entire intrinsic and extrinsic economic activities, including consumption of goods and services, production, distribution, trade, etc., at the hands of various economic agents involved. The regulation of their state of affairs and maintenance of their image to strengthen their sovereignty roots is indeed their prime priority while accomplishing these crucial tasks. Besides this, they also do so to achieve specific goals and attain characteristics necessary for their well-being and prosperity. Such as efficiency in their economic activities, equity for all in the country, economic freedom to choose and exercise economic activities, economic growth boosting- a necessity to stand out from others, employment opportunities for all ages, and price stability to attract foreign investors, tech-giants, and diaspora for better living standards in the contemporary global home, are some in this regard. To achieve these markers, all nations explore themselves and utilize their maximum specialized items and potential, whether their natural resources, peoples’ intellect, places of attraction, etc., hence extinguishing them in the markets by giving them a competitive edge over all. 

Moving towards the ripple effect of globalization’s wave on national economies’ trends in the current scenario, the economies have started adopting different strategies, especially after COVID-19, to avoid further disruptions and de-globalization debates. As the integrated world grows faster, not a single economy can afford the anathemas of turfs and nationalism. So, after opting for near or dual-sourcing rather than regionalization, they have focused on reforming their local industries to survive further geopolitical tensions.  To illustrate, Russia’s energy policies and the Russian-Ukraine war are prominent in this case.  Moreover, economies have also found other ways, like diversification of their customers, to avoid the decoupling aftershocks of the new US-China cold war. Viewing triangular efforts in this regard,  the US’s ‘China plus 1’ strategy of its ‘De-risking Policy’s part, China’s face towards other emerging markets and its role in the BRICS, and their close allies’ ever-increasing shares with the rival blocs  are collectively sketching the perfect picture of today’s intermingled not bifurcated national economies in the contemporary era. 

Taking an overview of how globalization has promoted national economies, it has boosted the ratio of free-trade agreements among the economies, increasing global interdependence. Due to this, the nations are getting closer, offering each other multiple trade opportunities, and representing their specialized commodities to each other to excel and grow with comparative advantages.  For instance, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a case in point.  In this partnership, 98 per cent of trade barriers have been removed for all member states; protection of intellectual property, investment diversity, and inclusivity in all approaches are some primary goals. Therefore, developing economies prefer to bind to these trade agreements for stability and growth in the globalized environment.

Further, national economies under the influence of globalization have assumed Foreign Direct Investment (FDI) as the best medium for their economic well-being. So, they have started formulating lucrative economic policies that help them attract FDI in their country.  To examine this argument’s validity, countries with low tax jurisdictions, Singapore and the Netherlands, have ranked at 98.38 and 95.98 per cent in the Investor Friendliness Index (2022), further increasing their FDI opportunities.  Indeed, they have reformed their taxation rules and regulations to bring investors’ attention towards their countries. Verily, developmental plans and social-net projects can also completed via their assistance. Hence, economies have started thinking outside the box regarding mechanisms to attract FDI towards them in the age of globalization. 

 Next, developing economies have also diligently started introducing different transportation services that are affordable for them and, above all, less time-consuming. Thanks to globalization, this miracle has become possible. In this way, national economies have access to their goods in time. One such example is containerization, which has made peoples’ lives more accessible and helps boost economies’ efficiency.  According to the New York Times, “Containerization has revolutionized the flow of goods just as the computer revolutionized the flow of information.”  Indeed, medical aid, even during the COVID-19 lockdowns, has been sent to every part of the globe due to this facility, thus proving its importance in a world characterized by globalization. 

Moreover, the expansion of local businesses internationally with the help of trading partners is also a venture launched due to globalization. According to this idea, the country’s businessmen or local industry can sign a business deal with other countries’ trading companies or men.  For example, Mexico’s automotive manufacturing industries or independent automotive mechanics under the United States-Mexico-Canada Agreement (UMSCA) supply their automotive machines’ parts, such as engines, electric systems, transmissions, etc.., to the US companies’ buyers.  Through this chain-work, the triad frame has helped local businesses grow and get recognized internationally so that other economies also start investing in them, proving globalization a factor behind national economies’ promotion. 

Additionally, after viewing globalization as a game changer, developing nations have started boosting their tourism industries. Through this move, they have benefitted their economies dually through heavy investment in their GDP and massive cultural exchange.  As per Indonesia Investments, “Indonesia has managed USD 10.46 billion in foreign exchange earnings from tourism during the quarter of 2023, witnessing a strong rebound in its sector despite the challenges posed by the pandemic.”  Indeed, this massive contribution to the country’s GDP has a ripple effect on its developmental initiatives and further planning. Besides, people-to-people contact has also imparted minimal impact in a way that it has imparted the country’s goodwill gesture on foreigners’ hearts and minds, furthering the industry’s growth and Economic growth, benefiting them from globalization.

Likewise, due to globalization, national economies have provided their people with full-scale employment and entrepreneurship opportunities.  For instance, India’s initiatives, like Make in India and Startup India, have encouraged local entrepreneurs to reform India into a global manufacturing hub and create jobs for locals.  By doing so, the multidimensional growth of economies in IT, education, economics, health, and many more sectors can make it possible to touch the acme of its glory. Thus, the vibrant initiatives have the potential to integrate and diffuse the world and simultaneously change their fate in the global landscape. 

More importantly, developing economies in the globalized world also adopt other developed nations’ successful developmental ideas, increasing knowledge transfer and capacity-building of their institutions.  In fact, Vietnam and Colombia have learned from the Dutch agro-tech model and implemented Integrated Pest Management (IPM) strategies, including monitoring and assessing crops and cultural, biological, chemical, and regulatory control to minimize their chemical inputs and protect crops.  Undoubtedly, this mechanism has proved very fruitful for their subsequent agriculture batches. And economies certainly learn about these holistic ideas and approaches due to the inclusion principle of globalization, thus demonstrating the validity of the aphorism. 

Last but not least, national economies can achieve their economic growth goalby leveraging e-commerce and digital trade using globalization tools . To exemplify this case, China’s e-commerce platforms, such as Alibaba and JD.Com, make trading more accessible and faster in today’s globalized world.  Using internet penetration, China has enabled its SMEs to access the global markets through these e-platforms and sell their valuable products to consumers directly without the intervention of brokers, bypassing the traditional trading mechanism completely. Therefore, using digitalization in economic growth is a unique revolution that has been brought into effect due to globalization worldwide. 

Going down the ladder, as every coin has two sides, the contenders of the maxim also provide different thoughtful insights refuting the maxim’s validity. First, these critics argue that developed countries dictate terms in global trade and investment, perpetuating asymmetrical power relations in the globalized cum controlled world. However, their criticism was invalid when, after analysis, it was brought forth that while power imbalances exist, globalization also enables developing countries to negotiate and participate in international forums.  Evidently, the World Trade Organization (WTO) allows all member states to voice their concerns and seek fair trade practices.  So, this collaborative practice integrates everyone economically on the global stage, disapproving of the critics’ viewpoint. 

Similarly, another point that critics raise is globalization has commodified indigenous people’s traditions, languages, and customs. No doubt, globalization has made the world a single village, but it has also made its efforts to make people accept this diversity and preserve their roots. All the cultural exchange programs are antidotes to Western consumer culture regarding technology, fashion, food, etc., such as Apple, Zara, McDonaldization, etc.  And the UNESCO’s Intangible Cultural Heritage advocates for the safety of traditional cultural practices worldwide.  Therefore, opponents’ points of contention have been overruled after these strong rebuttals, gaining the upper hand for the main question.

Stepping forward towards the suggestions for national economies that they should adopt in the future, keeping in view globalization’s amalgamation phenomenon, they should implement the multidimensional framework to assess national economic performance and growth quality. For this purpose, they should have to access their economic growth progress not just restricted to the GDP analysis but also balancing efficiency with resilience, equity, long-term sustainability, and innovation- discovering new ways and mechanisms to deal with the problem for the future. All these dimensions will bring them inclusiveness and align them with their national and global priorities, helping them tackle all economic crises in their economies. 

Second, national economies should shift towards a more sustainable growth model initiation and ensure their implementation in them. Indeed, these subsidiary starters would collectively complete all Sustainable Development Goals (SDGs) goals, primarily related to equity, economic growth, poverty, hunger, health, energy, partnerships, peace, production and consumption, etc. Some of them adopted by a few countries include Renewable Energy Revolution, Global Resource Management, Green Economy Skills, etc. By doing so, the national economies can thus remove all socio-cultural hurdles hindering their economic growth and performance. 

Finally, investing in physical and digital infrastructure to boost productivity and connectivity would make national economies more potent in the globalized world. Indeed, this is the era of competition and survival of the fittest, so every economy must have to invest in its infrastructure on dual lines to remain at the top. All those nations that would do so reap the benefits of trade and exports in the international world other than those who stay indulged in internal strife and proxies. So, all developing economies must take lessons from the war-torn nation’s condition and follow in the footsteps of emerging and developed economies. 

In a robust diagnosis, globalization has played a pioneering role for national economies, opening up opportunities for them in the contemporary era. Undoubtedly, it has provided a single show-stop platform for all economies to play their economic cards: trade, investment, ideas flow and exchange, distribution, agreements, e-buying and selling, exports, etc. Truly, these benefits have enhanced the economies’ growth and efficiency threshold, enabling them to thrive in the interconnected world. While creating a world full of options for national economies, critical thinkers consider globalization a trap thrown by developed ones over the developing, widening gaps and inequalities. Thus, inclusive policy-making and vibrant initiatives can further promote the globalization phenomenon, which is necessary for national economies to grow and excel at the top using the maximum potential. 

To conclude, globalization’s transformative force has become an undeniable reality in the twenty-first century. National economies dancing to globalization tunes change their trends and policy dealings accordingly. And those economies that align themselves accordingly have continuously seen a boom in their economic cycles, as it has contributed to creating ease for their trade terms and conditions, making them more independent in the international market, and introducing some new productive forums for them to showcase their knowledge and items. So, if contenders blame it as a feint, these pieces of evidence and arguments surely dispel their validity. Hence, more productivity inclusion would bring more integration and ease to all economies in the modern era. 

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The National Economics Challenge

America’s premier competition for high school students.

The tools of economic analysis teach students to think logically, use data smartly, and build analytic and problem-solving skills

Each year, close to 10,000 students from across the nation take the chance to shine while being tested on key micro and macroeconomic principles, as well as their knowledge of the world economy. 

The National Economics Challenge provides a platform for high school students of economics to compete with their peers on a national scale and make themselves and their schools proud.

Building knowledge, confidence, and camaraderie

The National Economics Challenge has a unique method for engaging, motivating, and rewarding high school students, making it a fun learning experience they’ll never forget. Participants compete for cash prizes, recognition, and bragging rights in one of two divisions: The Adam Smith division is for advanced placement, baccalaureate, honors students, and returning competitors, and the David Ricardo Division is for students participating in the NEC for the first time and who have taken no more than one economics course.

Working in local teams with instructors and economics professionals serving as coaches, students compete first at the state level. The winning team from each state moves on to the First Round National Challenge to vie for their spot in the National Semi-Finals.

The top four teams in the semi-finals advance and receive an all-expense paid trip to New York City to compete and earn cash prizes:

1st place $1,000 | 2nd place $500 | 3rd place $250 | 4th place $125

We’re proud to support young economics enthusiasts today, so they’re well-positioned to shape the very best tomorrow.

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Effects of Economic Globalization

Globalization has led to increases in standards of living around the world, but not all of its effects are positive for everyone.

Social Studies, Economics, World History

Bangladesh Garment Workers

The garment industry in Bangladesh makes clothes that are then shipped out across the world. It employs as many as four million people, but the average worker earns less in a month than a U.S. worker earns in a day.

Photograph by Mushfiqul Alam

Put simply, globalization is the connection of different parts of the world. In economics, globalization can be defined as the process in which businesses, organizations, and countries begin operating on an international scale. Globalization is most often used in an economic context, but it also affects and is affected by politics and culture. In general, globalization has been shown to increase the standard of living in developing countries, but some analysts warn that globalization can have a negative effect on local or emerging economies and individual workers. A Historical View Globalization is not new. Since the start of civilization, people have traded goods with their neighbors. As cultures advanced, they were able to travel farther afield to trade their own goods for desirable products found elsewhere. The Silk Road, an ancient network of trade routes used between Europe, North Africa, East Africa, Central Asia, South Asia, and the Far East, is an example of early globalization. For more than 1,500 years, Europeans traded glass and manufactured goods for Chinese silk and spices, contributing to a global economy in which both Europe and Asia became accustomed to goods from far away. Following the European exploration of the New World, globalization occurred on a grand scale; the widespread transfer of plants, animals, foods, cultures, and ideas became known as the Columbian Exchange. The Triangular Trade network in which ships carried manufactured goods from Europe to Africa, enslaved Africans to the Americas, and raw materials back to Europe is another example of globalization. The resulting spread of slavery demonstrates that globalization can hurt people just as easily as it can connect people. The rate of globalization has increased in recent years, a result of rapid advancements in communication and transportation. Advances in communication enable businesses to identify opportunities for investment. At the same time, innovations in information technology enable immediate communication and the rapid transfer of financial assets across national borders. Improved fiscal policies within countries and international trade agreements between them also facilitate globalization. Political and economic stability facilitate globalization as well. The relative instability of many African nations is cited by experts as one of the reasons why Africa has not benefited from globalization as much as countries in Asia and Latin America. Benefits of Globalization Globalization provides businesses with a competitive advantage by allowing them to source raw materials where they are inexpensive. Globalization also gives organizations the opportunity to take advantage of lower labor costs in developing countries, while leveraging the technical expertise and experience of more developed economies. With globalization, different parts of a product may be made in different regions of the world. Globalization has long been used by the automotive industry , for instance, where different parts of a car may be manufactured in different countries. Businesses in several different countries may be involved in producing even seemingly simple products such as cotton T-shirts. Globalization affects services, too. Many businesses located in the United States have outsourced their call centers or information technology services to companies in India. As part of the North American Free Trade Agreement (NAFTA), U.S. automobile companies relocated their operations to Mexico, where labor costs are lower. The result is more jobs in countries where jobs are needed, which can have a positive effect on the national economy and result in a higher standard of living. China is a prime example of a country that has benefited immensely from globalization. Another example is Vietnam, where globalization has contributed to an increase in the prices for rice, lifting many poor rice farmers out of poverty. As the standard of living increased, more children of poor families left work and attended school. Consumers benefit also. In general, globalization decreases the cost of manufacturing . This means that companies can offer goods at a lower price to consumers. The average cost of goods is a key aspect that contributes to increases in the standard of living. Consumers also have access to a wider variety of goods. In some cases, this may contribute to improved health by enabling a more varied and healthier diet; in others, it is blamed for increases in unhealthy food consumption and diabetes. Downsides Not everything about globalization is beneficial. Any change has winners and losers, and the people living in communities that had been dependent on jobs outsourced elsewhere often suffer. Effectively, this means that workers in the developed world must compete with lower-cost markets for jobs; unions and workers may be unable to defend against the threat of corporations that offer the alternative between lower pay or losing jobs to a supplier in a less expensive labor market. The situation is more complex in the developing world, where economies are undergoing rapid change. Indeed, the working conditions of people at some points in the supply chain are deplorable. The garment industry in Bangladesh, for instance, employs an estimated four million people, but the average worker earns less in a month than a U.S. worker earns in a day. In 2013, a textile factory building collapsed, killing more than 1,100 workers. Critics also suggest that employment opportunities for children in poor countries may increase negative impacts of child labor and lure children of poor families away from school. In general, critics blame the pressures of globalization for encouraging an environment that exploits workers in countries that do not offer sufficient protections. Studies also suggest that globalization may contribute to income disparity and inequality between the more educated and less educated members of a society. This means that unskilled workers may be affected by declining wages, which are under constant pressure from globalization. Into the Future Regardless of the downsides, globalization is here to stay. The result is a smaller, more connected world. Socially, globalization has facilitated the exchange of ideas and cultures, contributing to a world view in which people are more open and tolerant of one another.

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National Economic Policies Essay

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Policy Mix to Increase Output without Changing Interest Rates

Elasticity of money demand and its effects, fiscal policy under fixed and floating exchange rate system.

It is the desire of policy makers to boost economic growth in all ways possible. One of their main problem is always how to increase economic output while maintaining interest rates as low as possible because high interest rates discourage some components of aggregate demand especially investments.

The fiscal policy uses the government resources to alter aggregate demand thus, influencing economic performance of a country (Arnold 2010). To raise output, policy makers will need to implement expansionary fiscal policy. This means that the government can either choose to reduce the amount of tax that citizens have to pay, increase it purchases or increase its level of transfers.

The effects of taxes cannot be expected with certainty since it is not automatic that when people’s disposable income increases their spending follows suit, because others may choose to save instead of spending. When the government increases its level of purchases then, the level of planned expenditure in the whole country increases thus, demand for goods and services increases. Increases in demand means that suppliers can sell more commodities than they are currently selling therefore suppliers increase their output.

On the same note, when government chooses to reduce the amount of taxes that are levied, people will have more disposable income and they are likely to increase their spending thus increasing aggregate demand. This will give suppliers incentive to produce more thus increasing output, which will in turn increase the average levels of income.

It should be noted that, the increase in output is always more than the increase in government spending due to government multiplier. Expansionary fiscal policy makes the IS curve to shift to the right due to increase in aggregate demand which in turn increases output (Mankiw 2011).

Regrettably, as the IS curve shifts to the right it is not the output only that increases but also interest rates and because policy makers do not want any effect in the interest rates the LM curve must be induced to shift to the right. If expansionary monetary policy is implemented, for example by increasing the amount of money in the economy, the LM curve will shift to the right (Froyen 2008).

When the amount of money in circulation increases, the supply of money exceeds its demand and to boost the demand for money, banks have to reduce the interest rates thus making it cheaper to borrow.

The graph above shows the effects of expansionary fiscal policy as well as monetary policy on the IS LM curve. If the economy is initially in equilibrium at point A with interest rates i1 and output y1. Implementation of expansionary fiscal policy will cause a shift of the IS curve from I1S1 to I2S2 thus, changing the equilibrium from point A to point B with interest rate i2 and output y2.

An expansionary monetary policy shifts the LM curve rightwards from L1M1 to L2M2 increasing output to y3 but reducing interest rates back to i1 and setting the new equilibrium at point C. Therefore, through mixing expansionary fiscal and expansionary monetary policy, policy makers can increase output without increasing interest rates (Gordon 2008).

It is paramount to note that the quantity change in the demand for money is subjective to the elasticity of demand for money in relation to the factors that affect the demand for money.

Income elasticity of money demand is the percentage change in the quantity of money demanded as a result of unit change in income levels of people. Usually, people who have higher income levels tend to have higher expenses and thus demand more money for their transactions. However, it has been noted that the increase in real money demand is less proportional to increase in real income levels.

Alternatively, interest elasticity of money demand is the quantity change of demand in money caused by a unit change in interest rates. Interest rates represents the opportunity cost of holding money therefore, as they increase it becomes expensive to hold money.

Consequently, as the interest rates increases, rate of return on securities increases and people find it profitable to invest in securities instead of holding money. Accordingly, as interest rates increase, nominal demand for money decreases because people prefer to hold non-monetary assets as opposed to cash money.

Expansionary fiscal policy increases output and therefore, income of the people while at the same time it influences increase in interest rates. It will therefore be more effective if the income elasticity of money demand exceeds interest elasticity of money demand (Keynes 2006). This is because the quantity increase in demand for money to be spent will be higher than the quantity decrease in demand for money to be invested and thus the overall effect will be increase in output.

It should be noted that, the final quantity increase in aggregate demand and hence, the increase in output is highly influenced by the quantity decrease in investments as a result of increase in interest rates. The increase in output due to expansionary fiscal policy causes an increase in interest rates which is the cost of investments (Harford 2012).

This in turn leads to decrease in the amount of investments thus, reducing the quantity change in aggregate demand, a process referred to as crowding out effect. If interest elasticity of money demand exceeds income elasticity of money demand, the crowding out effect is large to the extent that it might completely eliminate the increase in output resulting from expansionary fiscal policy (Baumol & Blinder 2011).

The graph above shows IS LM curve of an economy. Expansionary fiscal policy shifts the I1S1 curve to I3S3 increasing both output and interest rates. The increase in interest rates makes investment expensive while non monetary assets become cheap. This leads to decrease in the level of private consumption and specifically investments thus, causing the IS curve to shift leftwards from I3S3 to I2S2 thus reducing the actual output from y 3 to y 2 .

It should be noted that, the leftward shift due to increase in interest rates is high when the interest elasticity of money demand is higher than the income elasticity of money demand, and in such a case it reduces the multiplier effect of fiscal policy. Therefore, the crowding out effect determines the quantity change in output due to expansionary fiscal policy and the higher it is the lower the quantity increase.

By operating a fixed exchange rate system, the government is ready to maintain exchange rate at the fixed level using all mechanisms that are available. When an expansionary fiscal policy is pursued in an economy where exchange rate is fixed, it leads to different results compared to a situation where the interest rates are floating (Tucker 2008). Let us first look at a situation where a country operates a fixed exchange rate system and the capital is perfectly mobile.

Expansionary fiscal policy will lead to increased aggregate demand hence, shifting the IS curve from I1S1 to I2S2 as shown in the graph above. This will exert pressure on exchange rates to go up, but since the central bank is determined to maintain exchange rate at the current level E*, it increases money supply through open market operations.

Increase in money supply causes the LM curve to shift to the right from LM1 to LM2 therefore pushing aggregate incomes upwards from y 1 to y 2. Since there is perfect mobility of capital, the capital can easily be transferred to production of commodities whose demand is high.

Let us now consider the outcomes of expansionary fiscal policy in case of a floating exchange rate. Expansionary fiscal policy shifts the IS curve rightwards from IS1 to IS2 as shown in the graph above. As a result, capital inflow increases which in turn increases demand for local currency therefore, increasing exchange rates from e 1 to e 2 while the aggregate income remains the same.

Therefore, under fixed exchange rate system expansionary fiscal policy has greater effects because it triggers expansionary monetary policy thus, increasing aggregate income even further. It is important to note that, since exchange rate is maintained constant, the problem of crowding out effect is minimized.

Arnold, RA 2010, Macroeconomics , Cengage Learning, Stanford.

Baumol, WJ & Blinder, AS 2011, Macroeconomics: Principles and Policy , Cengage Learning, Stanford.

Froyen, RT 2008, Macroeconomics: Theories and Policies , Prentice Hall, Upper Saddle River.

Gordon, RJ 2008, Macroeconomics , Addison-Wesley, Boston.

Harford, T 2012, The Undercover Economist , Oxford University Press, Oxford.

Keynes, JM 2006, The General Theory of Employment, Interest and Money , Atlantic Publishers, New Delhi.

Mankiw, NG 2011, Essentials of Economics , Cengage Learning, Stanford.

Tucker, I 2008, Economics for Today . Cengage Learning, Stanford.

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Economics Essay Examples

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Published on: Jun 6, 2023

Last updated on: Jan 31, 2024

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What is an Economics Essay?

An economics essay is a written piece that explores economic theories, concepts, and their real-world applications. It involves analyzing economic issues, presenting arguments, and providing evidence to support ideas. 

The goal of an economics essay is to demonstrate an understanding of economic principles and the ability to critically evaluate economic topics.

Why Write an Economics Essay?

Writing an economics essay serves multiple purposes:

• Demonstrate Understanding: Showcasing your comprehension of economic concepts and their practical applications.
• Develop Critical Thinking: Cultivating analytical skills to evaluate economic issues from different perspectives.
• Apply Theory to Real-World Contexts: Bridging the gap between economic theory and real-life scenarios.
• Enhance Research and Analysis Skills: Improving abilities to gather and interpret economic data.
• Prepare for Academic and Professional Pursuits: Building a foundation for success in future economics-related endeavors.

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If you’re wondering, ‘how do I write an economics essay?’, consulting an example essay might be a good option for you. Here are some economics essay examples:

Short Essay About Economics

A Level Economics Essay Examples

Here is an essay on economics a level structure:

Band 6 Economics Essay Examples

Here are some downloadable economics essays:

Economics essay pdf

Economics essay introduction

Economics Extended Essay Examples

In an economics extended essay, students have the opportunity to delve into a specific economic topic of interest. They are required to conduct an in-depth analysis of this topic and compile a lengthy essay. 

Here are some potential economics extended essay question examples:

• How does foreign direct investment impact economic growth in developing countries?
• What are the factors influencing consumer behavior and their effects on market demand for sustainable products?
• To what extent does government intervention in the form of minimum wage policies affect employment levels and income inequality?
• What are the economic consequences of implementing a carbon tax to combat climate change?
• How does globalization influence income distribution and the wage gap in developed economies?

IB Economics Extended Essay Examples 

IB Economics Extended Essay Examples

Economics Extended Essay Topic Examples

Extended Essay Research Question Examples Economics

Tips for Writing an Economics Essay

Writing an economics essay requires specific expertise and skills. So, it's important to have some tips up your sleeve to make sure your essay is of high quality:

• Start with a Clear Thesis Statement: It defines your essay's focus and argument. This statement should be concise, to the point, and present the crux of your essay.
• Conduct Research and Gather Data: Collect facts and figures from reliable sources such as academic journals, government reports, and reputable news outlets. Use this data to support your arguments and analysis and compile a literature review.
• Use Economic Theories and Models: These help you to support your arguments and provide a framework for your analysis. Make sure to clearly explain these theories and models so that the reader can follow your reasoning.
• Analyze the Micro and Macro Aspects: Consider all angles of the topic. This means examining how the issue affects individuals, businesses, and the economy as a whole.
• Use Real-World Examples: Practical examples and case studies help to illustrate your points. This can make your arguments more relatable and understandable.
• Consider the Policy Implications: Take into account the impacts of your analysis. What are the potential solutions to the problem you're examining? How might different policies affect the outcomes you're discussing?
• Use Graphs and Charts: These help to illustrate your data and analysis. These visual aids can help make your arguments more compelling and easier to understand.
• Proofread and Edit: Make sure to proofread your essay carefully for grammar and spelling errors. In economics, precision and accuracy are essential, so errors can undermine the credibility of your analysis.

These tips can help make your essay writing journey a breeze. Tailor them to your topic to make sure you end with a well-researched and accurate economics essay.

To wrap it up , writing an economics essay requires a combination of solid research, analytical thinking, and effective communication. 

You can craft a compelling piece of work by taking our examples as a guide and following the tips.

However, if you are still questioning "how do I write an economics essay?", it's time to get professional help from the best essay writing service -  CollegeEssay.org.

Our economics essay writing service is always ready to help students like you. Our experienced economics essay writers are dedicated to delivering high-quality, custom-written essays that are 100% plagiarism free.

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• Chapter 14: Forging the National Economy, 1790-1860
• The rise of Andrew Jackson, the first president form beyond the Appalachian Mountains, exemplified the inexorable westward march of the American people; the West, with its raw frontier, was the most typically American part of America
• The Republic and the people were so young —as late as 1850, half of Americans were under the age of thirty; By 1840 the “demographic center” of the American population map had crossed the Alleghenies; by the Civil War it had crossed the Ohio River
• Poorly fed, ill-clad, housed in hastily erected shanties, they were perpetual victims of disease, depression, and premature death; above all, unbearable loneliness haunted them, especially the women, who were often cut off from human contact
• Frontier life could be tough and crude for men as well as no-holds-barred wrestling was a popular entertainment and pioneering Americans, marooned by geography, were often ill informed, superstitious, provincial, and fiercely individualistic
• Popular literature of the period abounded with portraits of unique, isolated figures like Cooper’s heroic Natty Bumppo and Melville’s restless Captain Ahab
• Even in the era of “rugged individualist” there were important exceptions; pioneers, in tasks beyond their resources would call upon their neighbors for logrolling and barn raising and upon their government for help in building internal improvements
• Pioneers in a hurry often exhausted the land in the tobacco regions then pushed on
• In the Kentucky bottomlands, tall cane posed a barrier but settlers soon discovered that when the cane was burned off, European bluegrass thrived in the canefields
• Kentucky bluegrass” made ideal pasture for livestock—and lured thousands
• By the 1820s American fur trappers were in the Rocky Mountain regions and the fur-trapping empire was based on the “rendezvous” system; each summer, traders ventured from St. Louis to the Rocky Mountain valley and waited for the trappers and Indians to arrive with beaver pelts to swap for manufactured goods from the East
• The trade thrived for two decades before the hats went out of style and fewer beavers
• Trade in buffalo robbers also flourished, leading eventually to the virtually total annihilation of the massive bison herds and still farther west, on the California coast, other traders bought up sea-otter pelts, driving otters to the point of near-extinction
• Aggressive, heedless exploitation of West natural bounty—“ecological imperialism”
• Searching for the United States’ distinctive characteristics, many observers found the wild, unspoiled character of the land, especially the West, to be defining
• Other countries may have mountains or rivers, but none had the pristine, natural beauty of America, unspoiled by human hands and reminiscent of a time before the dawn of civilization—attitude became a kind of national mystique, inspiring literature and painting, and eventually kindling a powerful conservation movement
• George Catlin was among the first to advocate for preservation of nature as deliberate national policy; he proposed the creation of a national park (Yellowstone, 1872)
• As the American people moved west, they also multiplied at an amazing rate; by mid-century the population was still doubling approximately every twenty-five years
• By 1860, the original thirteen states had more than doubled in number: thirty-three stars graced the American flag and the United States was the fourth most populous nation in the western world, exceed only by three European countries—Russia, France, and Austria
• Urban growth continued explosively; in 1790 only two American cities (Philadelphia and New York) had populations of twenty thousand or more but by 1860, there were 43
• Such over rapid urbanization unfortunately brought undesirable by-products; It intensified the problems of smelly slums, feeble street lighting, inadequate policing, impure water, foul sewage, ravenous rats, and improper garbage disposal
• Before this decade immigrants had been flowing in at a rate of sixth thousand a year, but suddenly the influx tripled in the 1840s and then quadrupled in the 1850s
• During these two feverish decades, over a million and a half Irish, and nearly as many Germans, swarmed down the gangplanks—why did they come?
• The immigrants came partly because Europe seemed to be running out of room; Europe grew and “surplus” people, who were displaced and footloose in their homelands before they felt the tug of the American magnet (nearly 60 million people abandoned Europe in the century after 1840, about 25 million went somewhere other than in the United States)
• There was freedom from aristocratic caste and state church; there was abundant opportunity to secure broad acres and better one’s condition
• Letters sent by immigrants—“America letters”—often described in glowing terms the richer life: low taxes, no compulsory military serve, and “three meat meals a day”
• The introduction of transoceanic steamships also meant that the immigrants could come speedily, in a matter of ten or twelve days instead of ten or twelve weeks
• Ireland was drained in the mid-1840s; a terrible rot attacked the potato crop, on which the people had become dangerously dependent, and about one-fourth of them were swept away by disease and hunger; all told, about two million perished
• Tens of thousands of destitute souls, feeling the Land of Famine for the Land of Plenty, flocked to America in the “Black Forties”—Ireland’s great export has been population
• These uprooted newcomers—too poor to move west and buy the necessary land, livestock, and equipment—swarmed into the larger seaboard cities (Boston and NYC)
• Forced to live in squalor, they were rudely crammed into the already-vile slums and were scorned by the older American stock, especially “proper” Protestant Bostonians, who regarded the scruffy Catholic arrivals as a social menace
• As wage-depressing competitors for jobs (kitchen maids and railroads) the Irish were hated by native workers—“No Irish Need Apply” was a sign commonly posted
• The Irish, for similar reasons, fiercely resented the blacks, with whom they shared society’s basement; race riots between black and Irish dockworkers flared up
• The friendless “famine Irish” were forced to fend for themselves; the Ancient Order of Hibernians, a semisecret society founded in Ireland to fight rapacious landlords, served in America as a benevolent society, aiding the downtrodden; it also helped spawn the “Molly Maguires,” a shadowy Irish miners’ union in the PA coal districts in 1860s-70s
• The Irish tended to remain in low-skill occupations but gradually improved their lot, usually by acquiring modest amounts of property (education of children usually cut short)
• Politics quickly attracted these gregarious Gaelic newcomers and they soon began to gain control of powerful city machines—American politicians made hast to cultivate the Irish vote, especially in the politically potent state of New York and politicians usually found it politically profitable to fire verbal volleys at London (Irish hatred of the British)
• The bulk of them were uprooted farmers, displaced by crop failures and other hardships; but a strong sprinkling were liberal political refugees
• Saddened by the collapse of the democratic revolutions of 1848, they had decided to leave the autocratic fatherland and flee to America—the brightest hope of democracy
• Zealous German liberals like Carl Schurz, a relentless foe of slavery and public corruption, contributed richly to the elevation of American political life
• Unlike the Irish, many Germanic newcomers possessed a modest amount of material goods; must of them pushed out to the lush lands of the Middle West, notably Wisconsin, where they settled and established model farms—like the Irish, they formed an influential body of voters, but they were less potent politically because they were more scattered
• The Conestoga wagon, the Kentucky rifle, and the Christmas tree were all German
• Germans had fled from the militarism and wars of Europe and consequently came to be a safeguard of isolationist sentiment in the upper Mississippi valley
• Better educated on the whole than the stump-grubbing Americans, they warmly supported public schools, including their Kindergarten (children’s garden)
• The Germans likewise did much to stimulate art and music; as outspoken champions of freedom, they became relentless enemies of slavery before the Civil War
• Yet the Germans—often dubbed “damned Dutchmen”—were regarded with suspicion by their old-stock American neighbors; seeking to preserve their language and culture, they sometimes settled in compact “colonies” and kept aloof from the surrounding community
• They were accustomed to the “Continental Sunday” and drank huge quantities of an amber beverage called bier (beer)—their Old World drinking habits, like the Irish, spurred advocates of temperance in the use of alcohol to redouble their reform efforts
• Not only did the newcomers take jobs from “native” Americans, but the bulk of the displaced Irish were Roman Catholics, as were a substantial minority of the Germans
• The Church of Rome was still widely regarded by many old-line Americans as a “foreign” church; convents were commonly referred to as “popish brothels”
• Roman Catholics were now on the move; seeking to protect their children from Protestant indoctrination in the public schools, they began in the 1840s to construct a separate Catholic educational system (expensive but revealed the strength of its commitment)
• With the enormous influx of the Irish and Germans in the 1840s and 1850s, the Catholics became a powerful religious group; in 1840 they ranked fifth behind the Baptists, Methodists, Presbyterians, and Congregationalists but by 1850, they bounded into first
• The noisier American “nativists” rallied for political action; in 1849, they formed the Order of the Star-Spangled Banner, which soon developed into the formidable American, or “Know-Nothing,” party—a name derived from its secretiveness
• Nativists” agitated for rigid restrictions on immigration and naturalization for laws authorizing the deportation of alien paupers; promoted a lurid literature of exposure
• There was occasional mass violence and the most frightful flare-up occurred during 1844 in Philadelphia were the Irish Catholics fought back against the threats of “nativists”—two Catholic churches had been burned and over fifty wounded
• The vigorous growth of the economy in these years both attracted immigrants in the first place and ensured that they could claim their share of the American wealth
• They helped fuel economic expansion but without the newcomers, an agricultural United States might have just watched the Industrial Revolution in envy
• The Industrial Revolution was accompanied by a transformation in agricultural production and in the methods of transportation and communication
• The Factory system gradually spread from Britain to other lands and it took a generation or so to reach western Europe, and then the United States
• The American Republic was slow to embrace the factory system because the virgin soil in America was cheap; labor was therefore generally scarce and enough nimble hands to operate machines were hard to fine—until immigrants began to pour ashore in the 1840s
• Money for capital investment was not plentiful in pioneering America; raw materials lay undeveloped, undiscovered, or unsuspected—much of coal was imported from Britain
• Just as labor was scarce, so were consumers—the young country at first lacked a domestic market large enough to make factory-scale manufacturing profitable
• Established British factories provided cutthroat competition and posed another problem
• The British also enjoyed a monopoly of the textile machinery, whose secrets they were anxious to hide from foreign competitors; parliament enacted laws to protect its economy
• Not until the middle of the 19 th century did the factories exceed output of the farms
• A skilled British mechanic, he was attracted by bounties being offered to British workers familiar with the textile machines; after memorizing the plans for the machinery, he escaped in disguise to America, where he won the back of Moses Brown, a Quaker capitalist in Rhode Island  (he put into operation in 1791 the first efficient American machinery for spinning cotton thread)
• Although the mechanism was ready, where was the cotton fiber—process expensive
• After graduating from Yale and journeying to Georgia, in 1793, he built a crude machine called the cotton gin that was 50 times more effective than the hand process
• Almost overnight the raising of cotton became highly profitable and the South was tied hand and foot to the throne of King Cotton; the insatiable demand for cotton revived the chains on the limbs of the downtrodden southern blacks
• South and North both prospered; slave-driving planters cleared more acres for cotton, pushing the Cotton Kingdom westward off the depleted ride-water plains
• Factories at first flourished most actively in New England, though they branched out into the more populous areas of New York, New Jersey, and Pennsylvania; the South’s capital was bound up in slaves—its local consumers for the most part were desperately poor
• Dense population provided labor and accessible markets; shipping brought in capital; snug seaports made import of raw materials and export of finished products easy
• The Rapid rivers provided abundant water power to turn the cogs of the machines; by 1860 more than 400 million pounds of southern cotton poured annually into the gaping maws of over a thousand mills, mostly in the New England region
• Stern necessity dictated the manufacture of substitutes for normal imports, while the stoppage of European commerce was temporarily ruinous to Yankee shipping
• Generous bounties were offered by local authorities from home-grown goods
• British competitors unloaded their dammed-up surpluses at ruinously low prices
• Responding to the pained out-cries, Congress provided some relief when it passed the mildly protective Tariff of 1816—attempt to control the shape of the economy
• Prominent among them was the manufacturing of firearms and here the wizardly Eli Whitney again appeared with an extraordinary contribution
• About 1798, Whitney seized upon the idea of having machines make each part, so that muskets could be scrambled and reassembled—interchangeable parts
• The principle of interchangeable parts was widely adopted by 1850 and it ultimately became the basis of modern mass-production, assembly-line methods
• The sewing machines, invented by Elias Howe in 1846 and perfected by Isaac Singer, gave another strong boost to northern industrialization; the sewing machine became the foundation of the ready-made clothing industry, which took root near the Civil War
• Each momentous new invention seemed to stimulate sill more imaginative inventions, patents in 1800 numbered only 306 patents but by the end of 1860, it totaled 28,000
• Technical advances spurred equally important changes in the form and legal status of business organizations—the principle of limited liability aided the concentration of capital by permitting the individual investor to risk no more than his own share of stock
• One of the earliest investment capital companies, the Boston Associates, eventually dominated the textile, railroad, insurance, and banking business of Massachusetts
• Laws of “free incorporation,” first passed in New York in 1848, meant that businessmen could create corporations without applying for individual charters from legislatures
• Samuel F. B. Morse’s telegraph was among the inventions that tightened the sinews of an increasingly complex business world; by the eve of the Civil War, a web of singing wires spanned the continent, revolutionizing news gathering, diplomacy, and finance
• One bad outgrowth of the factory system was an acute labor problem; the industrial revolution submerged the personal association to the impersonal ownership of factories
• While many owners waxed fat, working people often wasted away at their workbenches; hours were long, wages were low, and meals were skimpy
• Workers were forced to toil in unsanitary buildings and were forbidden by law to form labor unions for such activities were regarded as criminal conspiracies
• Vulnerable to exploitation were child workers; in 1820 half the nation’s industrial toilers were children under ten years of age; they were victims of factory labor
• By contrast, the lot of most adult wage workers improved markedly in the 1820s and 1830s; in flush of Jacksonian democracy, many of the states granted the laborers the vote
• Employers fought the ten-hour day to the last ditch and argued that reduced hours would lessen production, increase costs, and demoralize the workers—more free time
• A red-letter gain was at length registered for labor in 1840, when President Van Buren established the ten-hour day for federal employees on public works
• Dozens of strikes erupted in the 1830s and 1840s, most of them for higher wages, some for the ten-hour day, and a few for such unusual goals as right to smoke on job
• The workers usually lost more strikes than they won for the employer could resort to importing strikebreakers, often fresh off the boat from the Old World
• Labor’s early and painful efforts at organization had netted some 300,000 trade unionists by 1830; but such gains were negated with the severe depression of 1837
• As unemployment spread, union membership shriveled; yet toilers won a promising legal victory in 1842 when the supreme court of Massachusetts ruled in the case of Commonwealth v. Hunt that labor unions were not illegal conspiracies
• The enlightened decision did not legalize the strike overnight but it was significant
• New factories such as the textile mills undermined these activities, cranking out manufactured goods much faster than they could be made by hand at home
• Yet these same factories offered employment to the very young women whose work they were displacing; factory jobs promised greater economic independence
• Factory girls” typically toiled six days a week, earning work “from dark to dark”
• The Boston Associates pointed to their textile mill at Lowell, MA as a showplace factory where most workers were farm girls who were carefully supervised on and off
• Catharine Beecher tirelessly urged women to enter the teaching profession; she eventually succeeded beyond her dreams, as men left teaching for other lines of work and school teaching became a thoroughly “feminized” occupation
• About 10% of white women were working for pay outside their won homes in 1850, and estimates are that about 20% of all women had been employed before marriage
• The vast majority of workingwomen were single; upon marriage, they left their paying jobs and took up their new work as wives and mothers (they were enshrined in a “cult of domesticity” a widespread cultural creed that glorified functions of the homemaker)
• From their pedestal, married women commanded immense moral power and they increasingly made decisions that altered the character of the family itself
• Women’s changing roles and the spreading Industrial Revolution brought some important changes in the life of the nineteenth-century changes in the life of the 19 th century home
• Love, not parental “arrangement” more and more frequently determined the choice of a spouse—yet parents often retained the power of veto; families more closely knit
• Most striking, families grew smaller; the “fertility rate,” or number of births among women age fourteen to forty-five, dropped sharply among white women in the years after the Revolution and in the course of the 19 th century as a whole, fell by half
• Women undoubtedly played a large part in decisions to have fewer children
• This newly assertive role for women has been called “domestic feminism” because it signified the growing power and independence of women (“cult of domesticity”)
• Smaller families, in turn, meant child-centered families, since where children are fewer, parents can lavish more care on them individually; lessons were enforced by punishments other than the hickory stick (shaping the child instead of just breaking the child)
• In the little republic of the family, good citizens were raised not to be meekly obedient to authority, but to be independent individuals who could make their own decisions on the basis of internalized moral standards (small, affectionate, child-centered modern family)
• Pioneer families first planted their painfully uneven fields to corn; the yellow grain was amazingly versatile and could be fed to hogs or distilled into liquor
• Both these products could be transported more easily than the bulky grain and they became the early western farmer’s staple market items (trade of hogs)
• Most western produce was at first floated down the Ohio-Mississippi River system, to feed the lusty appetite of the booming Cotton Kingdom but western farmers were as hungry for profits as southern slaves and planters were for food (cultivated more land)
• One of the first obstacles that frustrated the farmers was the thickly matted soil of the West, which snapped fragile wooden plows and John Deere of Illinois in 1827 finally produced a steel plow; sharp and effective, it was light enough to be pulled by horses
• In the 1830s, Cyrus McCormick contributed the most wondrous contraption of all: a mechanical mower-reaper; the clattering cogs of his horse-drawn machine were to western farmers what the cotton gin was to southern planters
• Seated on his reaper, a single man could do the work of five men with scythes
• The mower-reaper made ambitious capitalists out of humble plowmen who now scrambled for more acres on which to plant more fields of billowing wheat
• Subsistence farming gave way to production for the market, as large-scale, specialized, cash-crop agriculture came to dominate the trans-Allegheny West; soon hustling farmer-businesspeople were annually harvesting a larger crop than the South could devour
• They began to dream of markets elsewhere but they were still largely land-locked; commerce moved north and south on the river systems; before it could begin to move east-west in bulk, a transportation revolution would have to occur
• In 1789, primitive methods of travel were still in use; waterborne commerce, whether along the coast or on the rivers, was slow, uncertain, and often dangerous
• Cheap and efficient carriers were imperative if raw materials were to be transported to factories and if finished products were to be delivered to consumers
• ​ The Lancaster Turnpike proved to be a highly successful venture, returning as high as 15 percent annual dividends to its stockholders; it attracted a rich trade to Philadelphia and touched off a turnpike-building boom that lasted about twenty years
• The turnpike also stimulated western development and beckoned to the canvas-covered Conestoga wagons, whose creakings herald a westward advance
• One pesky roadblock was the noisy states’ righters, who opposed federal aid to local projects; Eastern states also protested against their populations moving westward
• Westerners scored a notable triumph in 1811 when the federal government began to construct the elongated National Road, or Cumberland Road
• This highway ultimately stretched from Cumberland, in western Maryland, to Vandalia, in Illinois, a distance of 591 miles; War of 1812 interrupted construction and states’ rights shackles on internal improvements hampered federal grants
• But the thoroughfare was finally, belatedly brought to its destination in 1852 by a combination of aid from the states and the federal government
• The steamboat craze, which overlapped the turnpike craze, was touched off by an ambitious painter-engineer named Robert Fulton who installed a powerful steam engine in a vessel that posterity came to know as the Clermont but was dubbed “Fulton’s Folly”
• On a historic day in 1807, the little ship churned steadily from New York City up the Hudson River toward Albany and made the run of 150 miles in 32 hours
• As keelboats had been pushed up the Mississippi at less than one mile an hour, a process that was prohibitively expensive, now the steamboats could churn rapidly against eh current, ultimately attaining speeds in excess of ten miles an hour
• By 1820 there were some sixty steamboats on the Mississippi and by 1860 about one thousand; keen rivalry among the swift and gaudy steamers led to memorable races
• Chugging steamboats played a vital role in the opening of the West and South, both of which were richly endowed with navigable rivers (population clusters)
• A few canals had been built around falls and elsewhere n the colonial days; resourceful New Yorkers, cut off from federal aid by states’ righters, themselves dug the Erie Canal, linking the Great Lakes with the Hudson River
• They were blessed with the driving leadership of Governor DeWitt Clinton, whose grandiose project was called “Clinton’s Big Ditch” or “the Governor’s Gutter”
• Begun in 1817, the canal eventually ribboned 363 miles and on its completion in 1825, a garlanded canal boat glided from Buffalo, on Lake Erie, to the Hudson River and on to New York harbor—water from Clinton’s keg baptized the Empire state
• Mule-drawn passengers and bulky freight could now be handled with thrift and dispatch, at the dizzy speed of five miles an hour (cost of shipping fell drastically)
• Industry in the state boomed; the new profitability of farming in the Old Northwest attracted thousands of European immigrants to the unaxed and untaxed lands there
• Other profound economic and political changes followed the canal’s completion
• The price of potatoes in NYC was cut in half, and many dispirited New England farmers, no longer able to face the ruinous competition, abandoned their holdings
• Some because mill hands, thus speeding the industrialization of America and others, finding it easy to go west over the Erie Canal, took up new farmland south of the Great Lakes; still others shifted to fruit, vegetable, and dairy farming
• Able to go almost anywhere, even through the Allegheny barrier, it defied terrain and weather; the first railroad appeared in the United States in 1828 and by 1860, the United States boasted thirty thousand miles of railroad track; ¾ of it in the North
• At first the railroad faced strong opposition from vested interests, especially canal backers; early railroads were also considered a dangerous public menace for flying sparks could set fire to nearby haystacks and houses and fear railway accidents
• Railroad pioneers had to overcome other obstacles as well; brakes were so feeble that the engineer might miss the station twice, both arriving and back; distance between the rails meant frequent changes of trains for passengers; but gauges soon became standardized, better brakes did brake, safety devices were adopted, and luxury trains introduced
• Other forms of transportation and communication were binding together the United States and the world; a crucial development came in 1858 when Cyrus Field finally stretched a cable under the deep North Atlantic waters from Newfoundland to Ireland
• Although this initial cable went dead after three weeks of public rejoicing, a heavier cable laid in 1866 permanently linked the American and European continents
• The United States merchant marine encountered rough sailing during much of the early nineteenth century; American vessels had been repeatedly laid up by the embargo, the War of 1812, and the panics of American in the years of 1819 and 1837
• Yankee naval yards, notably Donald McKay’s at Boston, began to send down the ways sleek new craft called clipper ships—they glided across the sea under towering masts and clouds of canvas; in a fair breeze, they could outrun any steamer
• The stately clippers sacrificed cargo space for speed, and their captains made killings by hauling high-value cargoes in record times; they wrested much of the tea-carrying trade between the Far East and Britain from their slower-sailing British competitors
• The hour of glory for the clipper was relatively brief as on the eve of the Civil War, the British had clearly won the world race for maritime ascendancy with their iron tramp steamers; although slower and less romantic, they were more reliable/roomier
• By 1858 horse-drawn overland stagecoaches were a familiar sight and their dusty tracks stretched from the bank of the Missouri River clear to California
• Even more dramatic was the Pony Express, established in 1860 to carry mail speedily the two thousand lonely miles from St. Joseph, Missouri, to Sacramento, California
• Daring lightweight riders, leaping onto wiry ponies saddled at stations approximately ten miles apart, could make the trip in an amazing ten days (folded after 1.5 years)
• The express riders were unhorsed by Samuel Morse’s clacking keys, which began tapping messages to California in 1861—dying technology of wind and muscle
• Until about 1830 the produce of the western region drained southward to the cotton belt but the steamboat vastly aided the reverse flow of finished goods up the watery western arteries and helped bind West and South together
• But the truly revolutionary changes in commerce and communication came in the three decades before the Civil War, as canals and railroad tracks radiated out from the East, across the Alleghenies and into the blossoming heartland
• They would offset the “natural” flow of trade by a grid of “internal improvements”
• The builders succeeded beyond their wildest dreams; the Mississippi was increasingly robbed of its traffic; by the 1840s the city of Buffalo handled more western produce than New Orleans; New York City became the seaboard queen of the nation (huge port)
• The South raised cotton for export to livestock to feed factory workers in the East and in Europe; the East mad machines and textiles for the South and the West
• Many Southerners regarded the Mississippi as the chain linking the North and South
• as more and more Americans linked their economic fate to the burgeoning market economy, the self-sufficient households of colonial days were transformed
• In growing numbers they now scattered to work for wages in the mills, or they planted just a few crops for sale at market and used the money to buy goods made by strangers in far-off factories (store-bought products replaced homemade products)
• Traditional women’s work was rendered superfluous and devalued; the home itself, once a center of economic production in which all family members cooperated, grew into a place of refuge from the world of work—special and separate sphere of women
• Revolutionary advances in manufacturing and transportation brought increased prosperity to all Americans, but they also widened the gulf between the rich and poor
• Cities bred the greatest extremes of economic inequality; unskilled workers fared worst and many of them came to make up a floating mass of “drifters,” buffeted from town to town by the shifting prospects for menial jobs—accounted for brawling industrial centers
• Although their numbers were large, they left little behind them; many myths about “social mobility” grew up over the buried memories of these unfortunate day laborers; rags-to-riches success stories were relatively few but there was not excessive mobility
• Yet America, with its dynamic society and wide-open spaces, undoubtedly provided more “opportunity” than the contemporary countries of the Old World; general prosperity helped defuse the potential class conflict that might otherwise have explode

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More apush chapter outlines.

• Chapter 2: The Planting of English America, 1500-1733
• Chapter 3: Settling the Northern Colonies, 1619-1700
• Chapter 4: American Life in the Seventeenth Century, 1607-1692
• Chapter 5: Colonial Society on the Eve of Revolution, 1700-1775
• Chapter 7: The Road to Revolution, 1763-1775
• Chapter 8: America Secedes from the Empire, 1775-1783
• Chapter 9: The Confederation and the Constitution, 1776-1790
• Chapter 10: Launching the New Ship of State, 1789-1800
• Chapter 12: The Second War for Independence and the Upsurge of Nationalism, 1812-1824
• Chapter 13: The Rise of a Mass Democracy, 1824-1840
• Chapter 15: The Ferment of Reform and Culture, 1790-1860
• Chapter 16: The South and the Slavery Controversy, 1793-1860
• Chapter 17: Manifest Destiny and Its Legacy, 1841-1848
• Chapter 18: Renewing the Sectional Struggle, 1848-1854
• Chapter 19: Drifting Toward Disunion, 1854-1861
• Chapter 20: Girding for War - The North and the South, 1861-1865
• Chapter 21: The Furnace of Civil War, 1861-1865
• Chapter 22: The Ordeal of Reconstruction, 1865-1877
• Chapter 23: Paralysis of Politics in the Gilded Age, 1869-1896
• Chapter 24: Industry Comes of Age, 1865-1900
• Chapter 25: America Moves to the City, 1865-1900
• Chapter 26: The Great West and the Agricultural Revolution, 1865-1896
• Chapter 27: The Path of Empire, 1890-1899
• Chapter 28: America on the World Stage, 1899-1909
• Chapter 29: Progressivism and the Republican Roosevelt, 1901-1912
• Chapter 30: Wilsonian Progressivism at Home and Abroad, 1912-1916
• Chapter 31: The War to End War, 1917-1918
• Chapter 32: American Life in the “Roaring Twenties,” 1919-1929
• Chapter 33: The Politics of Boom and Bust, 1920-1932
• Chapter 34: The Great Depression and the New Deal, 1933-1939
• Chapter 35: Franklin D. Roosevelt and the Shadow of War, 1933-1941
• Chapter 36: America in World War II: 1941-1945
• Chapter 37: The Cold War Begins, 1945-1952
• Chapter 38: The Eisenhower Era, 1952-1960
• Chapter 39: The Stormy Sixties, 1960-1968
• Chapter 40: The Stalemated Seventies, 1968-1980
• Chapter 41: The Resurgence of Conservatism, 1980-2000
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Indian Economy

Make Your Note

The Indian Economy: A Review (Part - I)

• 28 Feb 2024
• 40 min read
• Quick Facts For Prelims
• Miscellaneous

Important Highlights of the Report

Ahead of the Interim Budget for 2024-25 the Finance Minister presented a 10-year review of the Indian economy.

• The economy is expected to expand from about $3.7 trillion this year to $5 trillion in three years , making it the world’s third-largest , and could even reach $7 trillion by 2030 .
• 1950-2014 and a “decade of transformative growth” since 2014.
• It highlights that the state of the economy was “ far from encouraging” due to structural constraints, tardy decision-making , and high inflation.
• However, post-2014 reforms have restored the economy’s ability to grow healthily, making India the fastest-growing G-20 nation.
• Qualitative Superiority: The review asserts that India’s 7% growth (when the world grows at 2%) is “qualitatively superior” to the 8%-9% achieved during the previous era when the global economy grew at 4%.

Summary of the Report

Indian Economy: Past, Present And Future

The indian growth story (1950 to 2014).

• India's share of world income declined from 22.6% in 1700 to 3.8% in 1952.
• The Indian government adopted a strategy in the 1950s.
• Rapid industrialisation
• Created large state-owned enterprises (SOEs)
• The decadal average growth rate (1952-60): 3.9%.
• Decadal growth rate of 4.1%.
• The 1962 Sino-Indian war.
• 1965-66 India-Pakistan war.
• Severe drought in 1965.
• Indian rupee devaluation of 57% during the 1970s.
• The 1970s were marked by severe political instability.
• Imposition of Emergency in 1975.
• Decline in decadal average growth rate during the 1970s, reaching 2.9%.
• Removal of Price Controls, Initiation of Fiscal Reforms, Revamp of the Public Sector, Reductions in Import Duties, De-licensing of the Domestic Industry, Promotion of Exports
• The 1980s also witnessed greater integration with the global economy, with a focus on promoting exports.
• Modest liberalization combined with significant government spending led to an improvement in Gross Domestic Product (GDP) growth, reaching 5.7% in the 1980s.
• The breakup of the Soviet Bloc posed an external shock.
• The Iraq-Kuwait war adversely affected trade and disrupted current account balances during 1990–1991.
• The external crisis, unsustainable government spending, and internal socio-political factors led to a Balance-of-Payments (BoP) crisis in 1991.
• Eliminating the complex system of rules, permissions, and licenses.
• Reversing the substantial inclination towards state ownership of production facilities.
• Ending the inward-looking trade strategy.
• Real GDP growth averaged 5.8% per annum in the 1990s.

Early 2000s Economic Momentum

• The growth dividends from transformative reforms implemented during the period 1998-2002 played a key role in economic growth.
• The early 2000s witnessed a global growth boom, and India attracted significant capital flows.
• Sarva Shiksha Abhiyan (SSA): Focused on universal education.
• National Rural Health Mission (NRHM): Implemented to address rural health needs.
• National Rural Employment Guarantee Scheme (NREGS) : To provide rural employment.
• Decadal Average Growth Rate : The growth rate in the 2000s was 6.3% per annum.
• Bad debts in banks began to accumulate.
• The bad debt ratio reached double-digit percentages, peaking at 11.2% in March 2018.
• Much of the bad debt originated between 2006 and 2008.
• In the period 2009-2014, the government attempted to sustain high economic growth by running high fiscal deficits and maintaining loose monetary policy for an extended duration.
• Nominal GDP growth remained high during this period.
• India experienced annual double-digit inflation rates for five consecutive years from 2009 to 2014.
• India faced high twin deficits , including a fiscal deficit of 4.9% in FY13.
• The current account deficit was also elevated, reaching 4.8% in FY13.
• The Indian rupee was overvalued during this period.
• The Indian rupee experienced a significant crash against the US dollar.
• Between 2009 and 2014, the Indian rupee depreciated annually by 5.9% on average.
• Outcome of Challenges: The combination of high fiscal deficits, loose monetary policy, twin deficits, and the overvalued rupee led to economic growth stalling during this period.

Lessons From the Growth Experience Till 2014

• Import substitution, export subsidies, stringent restraints on technology and investment cooperation.
• Controls on capacity expansion, licensing requirements for manufacturing industries.
• Import liberalization, export incentives, exchange rate policies, and expansionary fiscal policy.
• These reforms were seen to enhance productivity and boost demand through improved credit availability and high public expenditure.
• Simultaneously, unsustainable investments, questionable loans, opaque allocation of resources, and high fiscal deficits led to a BoP crisis in 1990-91.
• Trade policy reforms
• Industrial policy revamping
• Foreign Direct Investment (FDI) liberalization
• Private sector became the major engine of growth and employment generation during the 1990s and 2000s.
• Foreign technologies were denied due to a closed economy, lack of resources, and security reasons.
• Since the 1980s, technology has been progressively used to transform the Indian economy.
• GDP growth below 5%
• High Wholesale Price Index (WPI) inflation in food articles
• Accentuated structural constraints.
• Difficulties in quick decision-making .
• Subsidies limiting fiscal space for public investment.
• Especially in capital goods, and low-value addition in manufacturing.
• Presence of a large informal sector and insufficient labor absorption in the formal sector.
• Low agricultural productivity due to intermediaries, storage shortages, and inter-state movement issues.

2014 - 2024: Decade of Transformative Growth

• The Government of India initiated several structural reforms strengthening macroeconomic fundamentals.
• India emerged as the fastest-growing economy among G20 nations.
• Estimated growth of 7.3% in 2023-24 following 9.1% (FY22) and 7.2% (FY23).
• Urban unemployment rate dropped to 6.6%.
• Net new Employees' Provident Fund Organisation (EPFO) subscribers in the age group 18-25 consistently exceeded 55% of the total net new EPF subscribers since May 2023.
• Record expansion of road, rail, and air networks.
• 74 airports were built in the last nine years and the number of universities increased from 723 in 2014 to 1,113 in 2023.
• Gross Enrolment Ratio (GER) for girls increased to 27.9% in 2020 from 12.7% in FY10.
• Total enrolment in higher education rose from 3.4 crore in 2014 to 4.1 crore students in 2023.
• Government provided a 50-year interest-free loan of ₹1 lakh crore to states in FY23 and announced another ₹1.3 lakh crore in FY24.
• States utilized more than ₹97,000 crore out of the ₹1.3 lakh crore of interest-free loans for capital investment in the first eight months of FY24.
• States capital expenditure increased by more than 47% in the first six months of April-September 2023 compared to the same period in 2022.

Drivers of India’s Growth in the Last Decade

• Addressing the financial system crisis post-2020 with reforms such as recapitalization, Public Sector Banks (PSB) merger, and amendments to the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.
• Implementation of Insolvency and Bankruptcy Code (IBC) facilitated the clean-up of balance sheets.
• Enactment of Real Estate (Regulation and Development) Act, 2016 promoting transparent transactions and reducing black money circulation.
• Introduction of Goods and Services Tax (GST) , reduction in corporate and income tax rates, exemption for sovereign wealth funds and pension funds, and removal of Dividend Distribution Tax to reduce the tax burden on individuals and businesses.
• Enhanced tax base, reduced compliances, formalization of the economy, and consistently rising monthly gross collections.
• Revival of the disinvestment policy, introducing New Public Sector Enterprise (PSE) Policy for Aatmanirbhar Bharat to minimize government presence in PSEs.
• Introduction of initiatives to enhance manufacturing capabilities, promote exports, and provide Production Linked Incentives (PLI).
• Decriminalization of minor economic offenses under the Companies Act, 2013 , resulting in ease of doing business.
• Elimination of 25,000 unnecessary compliances and repeal of over 1,400 archaic laws.
• Introduction of initiatives such as Emergency Credit Line Guarantee Scheme (ECLGS) , redefinition of MSMEs under Aatmanirbhar Bharat, TReDS for addressing delayed payments, and extension of non-tax benefits for MSMEs.
• Effective Capital Expenditure by the Union government rose from 2.8% of GDP in FY14 to 4.5% in 2023-24 (BE).
• Programs like Bharatmala , Sagarmala, UDAN , and others addressing infrastructure and logistics bottlenecks.
• Over 10.11 crore women are given free gas connections.
• Construction of 11.72 crore toilets for the poor.
• Opening of 51.6 crore Jan Dhan accounts.
• Over 6.27 crore hospital admissions under the Ayushman Bharat Scheme.
• Construction of 2.6 crore pucca houses for the poor.

Challenges Confronting the Indian Economy

• Balancing energy security and economic growth against the need for energy transition poses multifaceted challenges.
• Policy actions related to energy choices have geopolitical, technological, fiscal, economic, and social dimensions.
• The advent of AI raises concerns about its impact on employment, particularly in service sectors.
• An IMF paper estimates that 40% of global employment is exposed to AI, emphasizing the need for investment in infrastructure and a digitally skilled labor force in developing economies.

Track Record of Overcoming Challenges

• Pradhan Mantri Kaushal Vikas Yojana (PMKVY): Aims to provide relevant industry skill training to Indian youth for better livelihoods, with around 1.3 crore candidates trained and 24 lakh individuals placed as of December 2023.
• Renewable Energy Promotion: Focused efforts to promote manufacturing and use of renewable energy, resulting in a combined installed capacity of 179.57 GW from renewable sources, including large hydropower, as of November 2023.
• Internet Penetration: Internet penetration in India crossed 50% in 2022, growing three-fold since 2014.
• Aadhar Implementation: Aadhar facilitated the transfer of over ₹34 lakh crores to more than 1167 crore beneficiaries under Direct Benefit Transfer (DBT) , with over 200 crore Aadhaar-based authentications monthly.
• Financial Inclusion: Prime Minister’s Jan Dhan Yojana reached 51.5 crore beneficiaries as of January 10, 2024, with a 3.5-fold growth since March 2015. Notably, 56% of account holders are women, and two-thirds are in rural and semi-urban areas.
• Covid-19 Response: Successful implementation of one of the world's largest vaccination programs using the CoWin app, administering 221 crore vaccine doses to the population aged 18 years and above.
• Technological Leap in Space Exploration : Launched 431 foreign satellites, with 396 launched since June 2014, showcasing advancements in space technology.
• Proactive Approach: India's 'Mission Mode' approach has been effective in addressing challenges, both existing and emerging.
• Adaptability: The country's ability to convert disadvantages into strengths and use technology for inclusive growth demonstrates adaptability and resilience.
• Growth Outlook: India's growth is estimated at 7.3% in FY24, with expectations of sustained strong growth.
• Current Account Deficit: Lowering current account deficit to 1% of GDP in FY24.
• MSME Focus: Reforms unleashing the productive potential of India’s MSMEs with streamlined regulatory and compliance obligations.
• Land Availability: Ensuring land availability at reasonable prices.
• Energy Needs: Measures addressing the energy needs of the growing economy.
• G20 Presidency: Successful hosting of G20 Presidency, marking India's arrival as a key consensus builder on the global stage.
• Chandrayaan-3: Successful reach to the South Pole of the Moon.
• 5G Deployment: Achieved the fastest deployment of 5G globally.

Global Significance and Trust

• Global Presence: Growing importance in the global economic landscape.
• Global Achievements: Major strides in various fields, including space exploration and technology deployment.
• Citizen Resilience: Path reflects the resilience and determination of Indian citizens founded on trust.

Key Factors Responsible for the Resilience of the Indian Economy

• Above-7% Growth: Displayed resilience with two consecutive years of above-7% growth post the pandemic-induced contraction in FY21.
• Potential Third Year: On track for a third year of above-7% growth in FY24.
• Achieved 7.6% growth in real terms in the first half of FY24 compared to the first half of FY23.
• First Advance Estimates by National Statistical Office Estimate indicate an estimated real GDP growth of 7.3% in FY24, exceeding forecasts by various agencies.
• Estimates from the National Statistical Office exceeding forecasts made by various national and international agencies.
• Possibility of growth surpassing the RBI's projection of 7%, indicating robust economic performance.
• Resilience evident in declining unemployment rates and rising economic activity.
• Healthy performance in high-frequency indicators, including E-way bill generation, rail freight, and port cargo traffic.
• Infrastructure focus and housing demand driving construction activity, reflected in increased steel consumption and cement production.
• Mobility, particularly air travel, exceeded pre-Covid levels despite pandemic challenges.
• Strong balance sheets of public sector banks rooted in RBI's Asset Quality Review, recapitalization, and enactment of the Insolvency and Bankruptcy Code (IBC).
• Simultaneous pursuit of energy security and energy transition without derailing high growth, underway before the pandemic.
• Resilience built on pre-pandemic domestic demand, a crucial pillar supporting the Indian economy.
• Identified measures across four blocks - Domestic Economy, Macroeconomic Stability, Human Resources, and External Economy.
• Building resilience to climate change, enabling the pursuit of energy security and transition without conflict.
• Estimated to grow at an average of 7.9% between FY22 and FY24.
• Few economies globally have maintained post-Covid recovery as consistently as India.
• Manufacturing Sector’s share in Gross Value Added (GVA) increased from 17.2% (FY14) to 18.4% (FY18) due to the Make in India mission. Remained robust at 17.7% (FY24) with Production Linked Incentive (PLI) schemes.
• Construction Sector’s share in total GVA was 8.8% (FY14) and almost recovered to 8.7% (FY24) after countering real estate price increases and pandemic challenges.
• Service Sector’s share in total GVA increased from 51.1% (FY14) to 54.6% (FY24) due to the pandemic and subsequent unlocking, leading to a surge in non-contact services. Government's drive towards digitalization, represented by India Stack, plays a substantial role.
• PFCE's share in GDP at current prices increased from an average of 58.4% in the eight years preceding the pandemic to 60.8% in the last three years ending FY24.
• Private Final Consumption Expenditure (PFCE) has emerged as a major growth driver post-Covid pandemic.
• India has emerged as the fastest-growing major economy, supported by a resilient PFCE.
• Robust increase in Per Capita Real Gross National Income (GNI) in the nine years before the pandemic.
• Registered a Compound Annual Growth Rate (CAGR) of 5.3% from FY12 to FY20.
• Strong government vision, market-friendly reforms, reduced compliance burden, simplified laws, opening up of sectors, and strategic disinvestment of public sector enterprises contributed to private sector growth.
• The government has implemented investor-friendly policies, allowing 100% FDI under the automatic route in most sectors.
• Policymakers contributed to nursing the financial sector back to health.
• Pragmatic monetary policy and coordination of economic and monetary policies played a significant role.
• The increase in Private Final Consumption Expenditure (PFCE) is balanced across durables, semi-durables, and services.
• After witnessing a decline in FY21, durables, semi-durables, and services registered double-digit growth in FY22.
• SEBI's enhanced market transparency, increased retail participation in the stock market, and growth in demat accounts generated the wealth effect.
• Government's boost to infrastructure investment created additional employment and incomes, strengthening PFCE.
• Digitalization enhanced financial inclusion, formalization of the economy, efficient service delivery, and transparent governance processes.
• Digitalization directly helped increase private consumption, both pre and post-pandemic.
• Aarogya Setu and CoWin apps were game-changers during the pandemic, facilitating tracking, containment, and vaccination efforts.
• The pandemic led to shifts in behavior, including virtual healthcare visits, digital payments, and accelerated grocery shopping.
• Digital payment systems like UPI aided the growth of e-commerce, with a projected CAGR of 16% between 2022 and 2026.
• Rural India showed increasing social and economic inclusiveness.
• PMJDY provided low-cost bank accounts, and DBT eased the direct transfer of benefits to these accounts, narrowing the rural-urban divide.
• The government's all-inclusive welfare approach is expected to contribute to expanding the middle class.
• The seemingly impressive investment rate in the first decade relied on excessive borrowing and over-optimism, leading to an unsustainable situation.
• Banks were reluctant to lend to corporates in the second decade, resulting in a decrease in the investment share of GDP.
• Stresses on balance sheets accumulated in the first decade, contributing to macro fragility, high fiscal deficit, high current account deficit, and sustained double-digit inflation.
• India was included in the infamous club of 'fragile-five' emerging economies.
• The government took measures to help banks strengthen their balance sheets by recapitalizing them and restructuring the industry.
• Stronger balance sheets in the non-financial corporate sector and banking sectors have been achieved.
• Growth in investments and credit has shown positive trends in the last three years.
• Data presented in Charts 3 and 4 support the assertion that investments and credit are poised to increase in the current decade.
• Efforts have resulted in healthier balance sheets, both in the private corporate sector and banking sector.
• Positive outcomes include private corporate investment beginning to increase.
• Banks are responding with increased credit disbursement.
• Non-food bank credit growth, net of personal loans, had experienced a decline from above 20% in 2008 to less than 10% in FY 2016.
• There has been a rebound, reaching 13% in FY23 (Chart 4).
• Public sector capital expenditure, including Union government capex, grants to states for capital asset creation, and Central PSEs' investment resources, increased from ₹5.6 lakh crore in FY15 to ₹18.6 lakh crore in FY24.
• Surge in capital expenditure was 5.1 times during this period.
• Grants to states for capital asset creation increased by 2.8 times, and resources of PSEs increased by 2.1 times.
• To facilitate the upscaling of capital expenditure, the Union government rebalanced its fiscal expenditure.
• Capital spending rose from 12% of total expenditure in FY18 to 22% in FY24 (Budget Estimate).
• The emphasis on infrastructure investments aims to address long-standing supply-side deficiencies in the Indian economy.
• The government accelerated work on a large pipeline of stalled infrastructure projects by addressing issues like construction delays, administrative inefficiencies, financing challenges, legal complexities, and land issues.
• The government digitized bureaucratic procedures, streamlined project approvals, eased legal constraints, reduced corporate tax rates, implemented a uniform GST regime, and opened new avenues for private investors.
• The Pragati/Project Monitoring Group (PMG) mechanism has played a crucial role in expediting the execution of long-delayed projects.
• Multiple proxy indicators and industry reports suggest the emergence of green shoots of a private capex upcycle in the post-pandemic years.
• The Index of Industrial Production (IIP) data indicates robust growth in the capital goods index (12.9%) and infrastructure/construction goods index (8.4%) in FY23.
• Listed/unlisted corporates indicate expanding private investment in the first half of FY24.
• Household sector investment constitutes the largest share in the total Gross Fixed Capital Formation.
• Household sector investment was on a rising trajectory just before the pandemic.
• The growth in real-estate prices showed a gradual decline, and there was a continued increase in bank credit for housing, contributing to the rise in household sector investment.
• After the pandemic, there has been a recovery in housing prices, with the average annual growth increasing from 2.3% in FY22 to 4.3% in H1 of FY24.
• The uptrend in housing sales and launches, despite factors like increased real-estate prices and higher interest rates, indicates the strength of the recovery of incomes and optimism about the future.
• The overall investment rate of the economy for the last three years has consistently surpassed the levels of FY16 relative to GDP.
• The increase in investments is driven by all three sectors of the economy - public sector, private sector, and households.
• This reflects confidence in the future economic prospects of the country.
• The sustained increase in the investment rate is expected to lay the foundation for investment-led growth in the Indian economy over the next decade.

Agricultural Sector Policies Ensuring Food Security

• Agriculture constitutes 18% of India's Gross Value Added (GVA) in FY24.
• Grew at an average annual rate of 3.7% from FY15 to FY23, compared to 3.4% from FY05 to FY14.
• Total food grains production for FY23 was 329.7 million tonnes, marking a rise of 14.1 million tonnes.
• India's global dominance in agricultural commodities: largest producer of milk, pulses, and spices.
• Second-largest producer of various commodities, including fruits, vegetables, tea, farmed fish, sugarcane, wheat, rice, cotton, and sugar.
• Agricultural exports reached ₹4.2 lakh crore in FY23, surpassing previous records.
• Consistent increase in Minimum Support Prices (MSPs) for 22 crops.
• Policy initiatives such as PM-KMY, PM-KISAN, and PMFBY provide financial and income support to farmers.
• Digital inclusion and mechanization promoted productivity.
• Launch of e-NAM (National Agriculture Market) in 2016 facilitating online trading of agricultural commodities.
• Affordable drone technology made available to farmers.
• Efforts to strengthen cooperative movement and creation of Agristack for effective planning and implementation of schemes.
• Focus on post-harvest infrastructure investment, sustainable agriculture practices, and promotion of natural farming.
• Timely and efficient procurement and distribution of food grains.
• Wheat procurement surpasses last year's total, reaching 262 LMT.
• Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) scheme introduced in 2018.
• Extension of Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) for five years starting from January 1, 2024.

Reform Push to the Indian Industry

• Industrial growth accelerated to 7.1% per annum from FY15 to FY19 compared to 5.5% in FY10 to FY14.
• Despite a short-lived contraction due to the COVID-19 pandemic, Indian Industry is likely to record a robust 8% growth per annum during the triennium ending March 2024.
• Targeted measures under 'Make in India' initiative to bolster domestic manufacturing.
• Production-Linked Incentive (PLI) scheme covering 14 sectors to incentivize manufacturers.
• Over ₹1.07 lakh crore investment, ₹8.7 lakh crore production/sales, and employment generation of over 7 lakh under PLI scheme.
• 1.14 lakh startups recognized, creating more than 12 lakh jobs.
• Open Network for Digital Commerce recorded more than 6.3 million transactions in November 2023.
• Regulatory reforms, including the decriminalization of 3,600 compliances, improved ease of doing business.
• Vibrant and dynamic MSMEs with supportive measures.
• Union Budget for FY24 facilitating timely receipt of payments for MSMEs.
• Udyam portal and Udyam Assist Platform (UAP) consolidating MSME information.
• PM Vishwakarma, offering support to artisans, attracting 48.8 lakh enrolments.
• Pradhan Mantri Mudra Yojana disbursed ₹25.98 lakh crore to small and micro enterprises.
• Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE) limit raised to ₹5 crore.
• Emergency Credit Line Guarantee Scheme (ECLGS) provided guarantees of ₹2.4 lakh crore.
• Unified Logistics Interface Platform (ULIP) under the National Logistics Policy integrated with 35 systems of 8 ministries, with 699 industry players registered.
• Logistics cost in the economy reduced by 0.8 to 0.9 percentage points of GDP between FY14 and FY22.
• Average turnaround time at major ports decreased from 4.2 days (FY04-FY14) to 2.9 days (FY14-FY22).
• Government's capex push reduced logistics costs, bolstered the construction industry, and contributed to around 12% per annum growth in construction from FY22 to FY24.

Digital Infrastructure and Delivery of Citizen-Centric Services

• Three interconnected layers: Identity Layer (Aadhaar), Payments Layer (UPI, Aadhaar Payments Bridge, Aadhaar Enabled Payment Service), and Data Layer (Account Aggregator).
• Identity Layer (Aadhaar) provided digital identity to every Indian.
• Payments Layer witnessed a surge in cashless payments, especially during the pandemic.
• Data Layer transformed the authentication ecosystem, reducing e-KYC costs from ₹1000 to ₹5.
• PMJDY utilized India Stack for direct benefit transfers into beneficiaries' bank accounts.
• PMJDY accounts grew threefold from 14.7 crore in March 2015 to 51.5 crore as of January 10, 2024.
• DBT mode transferred more than ₹33.6 lakh crore (as of December 2023).
• 100% FDI in the telecom sector and prohibition of discriminatory data tariffs increased competition.
• Average monthly data consumption per wireless data subscriber increased almost 300 times to 18.4 GB in June 2023 from 61.7 MB in March 2014.
• India among the fastest-growing fintech markets globally, third-largest after the USA and the UK.
• Sharp increase in business services exports linked to the proliferation of Global Capability Centres (GCCs) in India.
• GCCs account for more than 1% of India's GDP.

Return of Credit Creation

• Outpaced the growth in deposits.
• Non-food bank credit grew at 15% in FY23, the highest in the last decade.
• Improvement in asset quality across all Scheduled Commercial Bank (SCB) groups.
• Downward trend in the ratio of GNPAs and Net NPAs relative to total advances. Signifies a positive shift in asset quality, reducing non-performing assets.
• India's global ranking in resolving insolvency parameters improved from 136 to 52 in the first three years of IBC implementation.
• Government recapitalization measures helped improve profit margins of public sector banks (PSBs).
• Corporate profit margins increased due to the resolution of stressed assets, saving costs on debt servicing.
• Bank credit to MSMEs registered a CAGR of 14.2% from FY19 to FY24.
• Recent government emphasis on capital expenditure strengthened the credit cycle, with growing bank credit disbursal to the infrastructure sector.

Evolving Financial Markets to Support the Investment Needs of a Growing Economy

• Indian equity markets have outshone global counterparts, delivering an impressive CAGR of approximately 13.5% between January 2014 and December 2023.
• Volatility in 2023, measured by the standard deviation of the BSE Sensex, has decreased to levels last observed in 2019, reflecting increased stability.
• Adoption of digital technology has significantly enhanced retail investors' access to financial markets, evidenced by a remarkable 536% growth in demat accounts, reaching 13.9 crore by December 2023 from March 2014.
• Since FY15, a total of 1,050 companies have collectively raised ₹3.9 lakh crore through IPOs, showcasing the buoyancy in the market.
• Sustained IPO activity has positioned the Indian market as the fifth-largest globally by market capitalization.
• India's market capitalization to GDP ratio has witnessed a significant improvement, rising from 79% in 2014 to an impressive 104% by the end of 2022.
• India's robust equity market performance has translated into the second-largest weightage in the MSCI Emerging Markets index.
• The Indian corporate bond market has experienced substantial growth, doubling from ₹43 lakh crore in FY24 to a projected ₹100-120 lakh crore in FY30, according to CRISIL.
• Introduction of sovereign green bonds and regulatory measures by SEBI for instruments like InvITs and Municipal Bonds have contributed to the deepening and widening of the bond market.
• Large corporations listed on exchanges are mandated to fulfill 25% of their financing needs through the issuance of debt securities, promoting market growth.
• India's financial markets are anticipated to play a pivotal role in financing the nation's capital investment requirements in the future.
• Access to financial markets is expected to facilitate a broader pool of investors, allowing for diversified investments and safer savings growth.

Safeguarding Macroeconomic Stability

• The government and the Reserve Bank of India aim for macroeconomic stability, which includes strong output growth, price stability, and a robust external account.
• Institutional architecture has been committed to fostering macro stability in the face of multiple challenges.
• The period between FY09 and FY14 saw high average retail inflation, but since FY16, flexible inflation targeting has been adopted within the band of 4 +/- 2 per cent under the Monetary Policy Framework Agreement.
• The Price Stabilization Fund (PSF) has been effective in managing price volatility in agri-horticultural commodities.
• Despite challenges during the Covid-19 pandemic, inflation was kept within the 2 to 6 per cent range, aided by the PSF and improved fiscal and external balances.
• FY22 witnessed an economic revival, but by the end of FY22, global economic conditions worsened due to geopolitical conflicts and sanctions.
• Elevated global commodity prices, especially crude oil, and supply chain disruptions posed challenges.
• The government diversified energy supply sources to insulate the economy from vulnerabilities, contributing to India's growth revival.
• Inflationary pressures moderated in FY24, with average retail inflation easing to 5.5 per cent.
• Core inflation reached a 49-month low of 3.8 per cent in December 2023.
• Overall retail inflation is stable and within the notified tolerance band of 2 to 6 per cent.
• Global and domestic challenges, including untimely rains and weather-driven supply chain disruptions, impacted food prices.
• Supply-side initiatives, periodic open market releases, trade policy measures, and anti-hoarding measures helped keep food inflation at moderate levels, lower than many large economies.
• Supportive monetary policy by the Reserve Bank of India, including a progressive increase in the policy repo rate, aimed at aligning inflation with the target while supporting growth.
• The RBI projected that inflation would average 5.4 per cent in FY24 within the notified tolerance level.
• With likely improvements in the fiscal balance and external current account balance, macro vulnerabilities are expected to moderate.
• The government and the RBI have implemented a comprehensive approach, including inflation targeting, fiscal measures, and supply-side initiatives, to achieve and maintain macroeconomic stability in India despite various challenges.

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Essay on Indian Economy for Students in English | 500 Words Essay

December 20, 2020 by Sandeep

Essay on Indian Economy: India is mainly an agrarian economy with agricultural supplies contributing up to 50% of the GDP index. The government has created fair policies with wage revisions and labourers rights to boost economic growth. The service sectors, manufacturing units, iron and steel companies, chemical and textile sectors, automobile industries contribute to the economy of the country. Privatisation of many sectors along with demonetization has affected both big and small businesses in the country.

Essay on Indian Economy 500 Words in English

Below we have provided Indian Economy Essay in English, written in easy and simple words for class 6, 7, 8, 9 and 10 school students.

“There can be economy only where there is efficiency.” – Benjamin Disraeli

Indian economy is the fifth largest economy in the world currently. It is a developing market economy. The economic growth of India has even surpassed that of China in recent years. India has been able to successfully jump up ranks in various indexes, including the Ease of doing business index. Agriculture still remains the largest employer in the country, with the construction and real estate sector right behind it. India is the world’s second-largest coal and cement producer. The government has had a major role in accelerating the economic growth of the country.

The way industries operate in our country has been enhanced by the Industrial Policy. Many industries have been freed from the system of licensing and have no restriction on importing new and latest technology from other countries. The government has also taken up disinvestment in the industries where it is unprofitable. The focus on privatisation is being increased to intensify healthy competition. The government is also making efforts to revive and promote small scale industries and businesses.

The New Trade Policy has made it extremely easy for traders to carry out imports and exports. The trade of all items barring a restricted few has been allowed. Also, the tax on many items has been abolished, while for others, the amount has been visibly minimised. A lot of incentives are also being provided to exporters to encourage foreign trade and gain foreign currency.

History of the Indian Economy

For continuous 1700 years starting from the 1st century A.D., the Indian economy constituted about 35 to 40 percent of the world’s GDP and was the topmost flourishing economy. The Indus Valley civilisation proved to provide a form of permanent settlement to the people of the country alongside efficient water supply, urban planning and sanitation.

The silk route provides proof of early Indian trade. Under the Mughal empire, the Indian economy thrived and prospered. It was during this time that a focus on industrial production was also seen. Under the British rule, the Indian economy suffered some significant setbacks and was downtrodden. There were major changes seen in the agricultural sector. The commercialisation of agriculture increased. Farmers were forced to grow cash crops that were used in trade, rather than producing food crops.

This resulted in numerous famines. The once rich handicrafts and handloom sector also dipped and sunk during the British Raj. However, the colonial rule is responsible for giving the country railways, a legal system and a single currency exchange rate. The British era in India was rather exploitative, but our economy has come a long way since then with the help of policies pertaining to privatisation, liberalisation and globalisation .

Sectors of the Indian Economy

As the Indian economy has vastly diversified and grown in the previous years, the GDP contributed by the agricultural sector has reduced. However, it still continues to employ more than 50 percent of the country’s population . India is the largest producer of milk, pulses and jute and is the second-largest producer of wheat, rice and cotton. The agricultural sector accounts for about 20% of India’s GDP.

The main industries included in the Indian industrial sector include textile, construction, power, food processing, etc. The industrial sector employs around 22 percent of the country’s workforce and accounts for 26 percent of India’s GDP. Foreign Direct Investment is one measure by the government, which has increased foreign investments in the country, leading to further growth in this sector.

The services sector contributes the maximum to the GDP of the country. It includes financial services, aviation, insurance, hospitality, entertainment, etc. This sector employs around 23 percent of the Indian population. The main reason why the service sector has been able to do exceedingly well is because of outsourcing. The working population here is skilled, highly educated and cheaper than the labour in other countries.

Problems facing the Indian Economy

Unemployment is a problematic issue for the working-age population of India. The rate of unemployment has increased, and so has the population between the age bracket of 15-59 years. This unemployment is prevalent in the rural as well as the urban areas and is more widespread among the unskilled workers. A significant chunk, including women, especially those that live in rural areas are illiterate and have low educational standards. This leaves so much potential untapped and opportunities unexplored.

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How Is the Economy Doing?

By Ben Casselman and Lauren Leatherby Sept. 13, 2022

• Share full article

The U.S. economy is in a strange place right now. Job growth is slowing , but demand for workers is strong . Inflation is high (but not as high as last spring). Consumers are spending more in some areas, but cutting back in others. Job openings are high but falling, while layoffs are low and … well, it depends what indicator you watch.

This is one snapshot of where the economy stands, based on an analysis of how various indicators compare with their historical levels and whether they’ve been getting better or worse in recent months.

How conditions are faring for jobs, income, consumers and production :

Currently bad

Currently good

GETTING BETTER

GOOD AND GETTING BETTER

Capital goods

Unemployment

Manufacturing

and trade sales

earnings growth

GETTING WORSE

GOOD BUT GETTING WORSE

BAD BUT GETTING BETTER

There is no universally accepted definition of a “good” number of jobs or rate of wage growth, which means the exact placement of the various measures is somewhat subjective. Still, the patterns are revealing: The indicators are concentrated in the lower right-hand quadrant, meaning most of the economy is doing well, but slowing down.

Even in the best of times, it can be hard to get a handle on what’s happening in an economy with 150 million workers and $20 trillion worth of annual output. And these are far from the best of times. The pandemic and its ripple effects are continuing to disrupt global supply chains and keeping millions of Americans out of work . The war in Ukraine has pushed up gas and food prices, and added a new source of uncertainty. The Federal Reserve is trying to beat back the fastest inflation in decades — and threatening to cause a recession in the process.

By one common definition, the United States is already in a recession, because gross domestic product has declined for two consecutive quarters . Most economists consider that definition too simplistic , and prefer to look at a broader array of indicators across a variety of categories. They also say that to understand how the economy is doing, it is important to consider both levels and rates of change. It matters, for example, not only whether unemployment is low or high, but also whether it is rising or falling.

It also helps to consider the latest data in historical context. The graphics below show how this economic moment compares with recessions of the past 40 years, using the end of the second quarter as a benchmark. In most cases, the latest numbers don’t look much like the recessions of the past, although many show signs of a slowdown.

How current conditions compare with recessions over the last 40 years

Graphic shows year-over-year percentage change. Data for 2022 is presented as if a recession began in June, which marks the end of a second consecutive quarter of declines in gross domestic product. (An official designation of whether the United States is in a recession will be made in the future and will rely on several other indicators.)

If there is one part of the economy that is clearly doing well right now, it is the job market. Employers have added nearly six million jobs in the past year, and the unemployment rate recently matched a 50-year low. Employers would hire even more workers if they could find them: There were more than 11 million job openings at the end of July.

Still, not everything is rosy. The share of adults who are either working or actively looking for work is still well below its prepandemic level , which helps explain the frequent complaints from businesses that they can’t find enough workers. After months of strong gains, hiring slowed in August, and the total number of jobs remains millions below where it would be if the pandemic had never happened.

Layoffs, as measured through filings for unemployment claims, began rising earlier this year but have since edged back down; however, another measure, from a different survey, did not show a similar increase.

If layoffs pick up, watch out: In the past, when unemployment has increased even modestly, it has almost always meant the economy is in a recession.

Income and Prices

Graphic shows year-over-year percentage change. Data for 2022 is presented as if a recession began in June, which marks the end of a second consecutive quarter of declines in gross domestic product. Personal income data excludes transfer payments and is adjusted for inflation. Growth in hourly wages shows earnings for production and nonsupervisory employees.

Workers have seen their pay rise significantly in the past two years, as the hot labor market has given workers the leverage to demand raises. Other types of income, including from businesses and investments, have been rising too. The problem is, prices have been rising about as fast — or in some cases even faster.

The National Bureau of Economic Research, the semiofficial arbiter of recessions in the United States, focuses on personal income that is adjusted for inflation and excludes unemployment benefits and other government transfer payments. That indicator is still rising, in part because it measures income in the aggregate — meaning not how much the average person makes, but how much everyone, collectively, makes. When more people are working, overall incomes go up.

Many individuals, though, are falling behind. Inflation hit a four-decade high earlier this year, and though it has ebbed a bit in the past two months, no one is sure how long that will last. Even with the recent cooldown, average hourly earnings have risen more slowly than prices this year, although gains have been stronger among lower earners. Other measures of wages tell a similar story. And even without adjustments for inflation, wage gains have been slowing in recent months — a possible sign that workers’ rare moment of leverage may be nearing its end.

How current conditions compare to recessions over the last 40 years

Graphic shows year-over-year percentage change. Data for 2022 is presented as if a recession began in June, which marks the end of a second consecutive quarter of declines in gross domestic product. Consumer spending data and manufacturing and trade sales data are adjusted for inflation.

Economic indicators might be pointing in different directions, but this much is clear: Americans feel terrible about the economy right now. Consumer sentiment, as measured by a long-running survey from the University of Michigan, recently hit a record low — lower even than in the first weeks of the pandemic, when tens of millions of people lost their jobs overnight.

In the past, falling consumer sentiment has been a fairly reliable recession indicator. Consumer spending accounts for about 70 percent of G.D.P., so when people stop spending, the economy is almost guaranteed to run into hard times. So far, however, Americans haven’t acted on their dour mood by cutting back. Even in the face of high prices, people have continued to shell out for plane tickets, restaurant meals and other small luxuries. And now consumer sentiment is showing some signs of improvement as gas prices fall.

Interpreting the consumer economy is tough right now, however, because of how the pandemic disrupted spending patterns. Many people are eager to catch up on deferred travel and experiences, even if they have to pay more for them, which could cause spending on services like these to hold up even if the economy slows. Spending on goods, meanwhile, soared in the pandemic, as people traded gym memberships for home exercise equipment. Goods spending has now begun to slow. But supply-chain snarls have complicated the picture — rising car sales, for example, might mean that demand is strong, but it also might mean that production problems are easing and that there are finally more vehicles available to buy.

Graphic shows year-over-year percentage change. Data for 2022 is presented as if a recession began in June, which marks the end of a second consecutive quarter of declines in gross domestic product. Capital goods data excludes aircraft and military equipment.

Historically, one of the surest indicators of a coming recession has been a decline in orders for industrial equipment — companies don’t invest in so-called capital goods such as new machinery or delivery trucks when they’re worried that demand is about to fall sharply. Right now, though, those signals are being blurred by the same issues that make it hard to interpret consumer spending data. If manufacturers pull back now, is it because of falling demand, or because they can’t get the parts they need?

There is one sector that is, unequivocally, behaving as if we’re headed for a recession: housing. Ever since the Federal Reserve began raising interest rates this year, builders have been reducing construction, and would-be buyers have been pulling out of the market. So far, however, there is little sign of a surge in foreclosures or of the financial stresses caused by the last housing bust.

A slowdown that stays confined to one or two sectors doesn’t constitute a recession, which by definition involves a sustained decline in activity across a broad swath of the economy. It might not be obvious right away, but when a recession does hit, it will show up in virtually every major indicator.

Methodology

In the chart at the top of this story, the horizontal axis places indicators based on how they compare with their historical levels. For indicators that generally rise over time, such as payroll employment and consumer spending, the placement is based on how the current levels compare with their prepandemic path (specifically, the linear trend from 2017 to 2019). Employment, for example, is still somewhat below its previous trend line, so it is shown as slightly negative, while consumer spending is far above its trend, so it is most of the way to the positive (right) side of the chart.

For indicators with no long-run trend, placement is based on how current levels compare with their average from 2010 to 2019. The unemployment rate, for example, is substantially better than its long-run average, so it is shown as solidly positive.

The vertical axis is based on the change over the past three months. Employment growth has slowed but remains positive, so it is shown as positive, while the unemployment rate rose in August, so it is shown as slightly negative.

All indicators are converted to a consistent scale to allow for comparisons. So even though the unemployment rate is measured in percentage points and building permits are measured in thousands of units, we can see on the chart that the housing market is eroding faster than the labor market.

Sources: U.S. Bureau of Labor Statistics; U.S. Employment and Training Administration; U.S. Bureau of Economic Analysis; University of Michigan; U.S. Census Bureau; Board of Governors of the Federal Reserve System; Federal Reserve Bank of St. Louis

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• Social Sciences /

Lifelines of National Economy

• Updated on  
• Jul 27, 2021

A strong transportation and communication network plays an imperative role in building a prosperous nation. There are multifarious benefits of ensuring the development of advanced systems of transportation and communication in a country as they not only connect the varied regions and states as well as people through a smooth network but also significantly contribute to the economy as well. The 7th chapter of Class 10 Social Science is focused on the essential lifelines of the national economy, i.e. its transportation and communication networks like roadways, railways, waterways, airways, seaports, and pipelines, etc. as well as modes of communication and how they contribute to the economy. This blog summarizes this chapter and its key pointers which you must cover while studying this topic.

This Blog Includes:

Golden quadrilateral super highways, national highways, state highways, district roads, other roads, border roads, classification of the road network in india: construction material, national waterways, inland waterways, communication, international trade, tourism as trade, lifelines of national economy slideshare, lifelines of national economy mcq.

Lifelines of National Economy Class 10 PDF

India has one of the largest road networks in the world. Roads play a crucial role in ensuring the economic progress of our country. The expanse of the road network in the country is around 54.7 lakh km. Here are a few reasons why roads are considered more important than other modes of transportation:

• The construction cost of roads is much cheaper when compared with laying railway tracks.
• Roads can be easily laid to cover geographically remote locations, unlike railways.
• Movement of goods and travelling on roads is economical.
• Roads can reach the steep slopes of the Himalayas and other hilly terrains.
• Roads offer end-to-end connectivity.
• Roads offer last-mile connectivity to airports, railway stations, and seaports.

Classification of the Road Network in India: Geographical Location

The road network in India is classified on the basis of geographical location and capacity. Majorly they are divided into six different types depending on their purpose and capacity.

Studying the chapter on Lifelines of National Economy, you will get to know about the Golden Quadrilateral Super Highways which is a network of highways that connect the top four metropolitan cities of the country namely – Delhi, Mumbai, Kolkata, and Chennai. The construction and maintenance of these highways are carried out by the NHAI (National Highways Authority of India).

The National Highways are the next big network of roads. These are maintained by the CPWD (Central Public Works Department). The historical Sher-Shah Suri Marg that runs between Delhi and Amritsar is known as National Highway No.1. Each national highway is assigned a unique numerical code.

As the name implies, these roads are under the purview of each state government. They link a state capital with district capitals and are constructed and maintained by the SPWD (State Public Works Department).

These roads connect the district headquarters with other towns and villages in the district. They are constructed and maintained by the Zilla Parishad as stated in Lifelines of National Economy. 

Rural roads connecting rural villages with nearby towns fall under this category. These roads receive grants under the PMGSY (Pradhan Mantri Gramin Sadak Yojana) for maintenance and construction.

These are the roads that lie on India’s borders connecting our country with our neighbours. The Border Roads Organisation was established in 1960 for the construction and maintenance of strategic roads in the north-eastern and northern border states.

Related Read: The Rise of Nationalism in Europe Class 10 Study Notes

Apart from the classification of roads with respect to their geographical location, the chapter titled Lifelines of a National Economy also has also another category of road networks on the basis of construction material. The classification of roads as per the construction material used is as follows:

• Metalled Roads – These are all-season roads and are made of concrete, cement, or bitumen of coal.
• Unmetalled Roads – These roads do not withstand the rainy season.

Next to the roadways, railways are the major mode of transportation in India. Railways not only ply passengers but also carry tons of bulky goods on long and short distances. Railways have always occupied a major role in the nation’s economy. However, there are certain troubles plaguing rail transport and the key issues faced by railways are:

• It is difficult to lay railway tracks on sandy plains.
• Construction of bridges is required for laying railway tracks across river beds.
• In the hilly terrain of the Indian peninsula, railway tracks are laid via low hills, tunnels or gaps.
• Construction of railway lines in the Himalayan mountainous region is unfavourable due to several factors like – sparse population, uneven terrain, and lack of economic opportunities.

Pipelines are a large network of pipes that usually run underground. This network is used to transport and distribute crucial fluids like – water, petroleum, crude oil, natural gas to thermal power plants, and fertilizer factories. Even solids are transported via the underground pipeline network, by converting it into a slurry. The three important pipelines in the country as mentioned in Lifelines of National Economy:

• From Hazira in Gujarat to Jagdishpur in Uttar Pradesh
• From Salaya in Gujarat to Jalandhar in Punjab
• From the oil fields in upper Assam to Kanpur in Uttar Pradesh

Waterways are used for transporting bulky and heavy goods. They are the cheapest modes of transportation and offer several advantages like – fuel-efficiency and eco-friendly. As per the chapter on Lifelines of National Economy, here are the types of national waterways-

There are five national waterways in India. They are:

The major inland waterways in the country are Zuari and Cumberjua, Mandavi, Sunderbans, the backwaters of Kerala and Barak.

The bulk of India’s foreign trade is carried from its major seaports. There are two major and 200 minor/intermediate (notified non-majors) ports in India. The major ports are that can be counted as one of the lifelines to the national economy are:

• Kandla in Kutch is the first port to be built post-independence. It is also called the Deendayal Port.
• Mumbai is the biggest port in India. It’s a natural port and has a well-sheltered harbour.
• Chennai port has a long history and is one of the oldest artificial ports in the country. 
• Kolkata is an inland river port.
• Mangalore port in Karnataka is one of the major exporters of iron ore.
• Mormugao port in Goa is another premier port that exports iron ore.
• Paradip port, Odisha is another exporter of iron ore.
• Kochi, Kerala is the south-westernmost port in India and is situated at the entrance of a backwater lagoon.
• Tuticorin port, Tamil Nadu is the south-easternmost port in India.
• Visakhapatnam is one of the well-protected ports in the country. It is a landlocked port.
• Haldia port is a subsidiary port and was developed to relieve the pressure on Kolkata port.

Amongst the pivotal lifelines of the National Economy, Airways correspond to the Air-based mode of transport. It is a modern, fast, comfortable and prestigious mode of transport in India. Development of airways has opened the access to difficult to reach areas like – hilly terrains, dense forests and dreary deserts. Air transport in India was nationalized in 1953. Air India is the national carrier and offers both domestic and international air services. Today, there are several private players in the air transport sector.

Pawan Hans Helicopters Ltd offers helicopter services to ONGC (Oil and Natural Gas Corporation) to reach offshore operations centres and other difficult and inaccessible terrains.

The major modes of communication in our country are as stated in the chapter on lifelines of the national economy are television, press, radio, films, etc.

• The Indian postal network is the biggest postal network in the world. Besides personal written communications, it also offers parcel services. Envelopes and cards are considered first-class mail and are airlifted between stations. Journals, periodicals, and magazines are considered second-class mail and are sent via land and water transport.
• India has one of the largest telecom networks in Asia. Mass communication in India is used for entertainment as well as to create awareness of national policies and programs. The major modes of mass communication in India are newspapers, magazines, televisions, radio, films, and books.
• The national radio channel – Akashwani broadcasts in national, regional, and local languages.
• Doordarshan is the national television channel and broadcasts in national, regional, and local languages.
• In India, newspapers are published in over 100 languages.

Check Out: Streams After 10th

The exchange of goods and services between the two countries is known as international trade. The lesson on lifelines of national economy states that international trade is one of the crucial economic parameters. Goods sent out from the country are known as exports and goods brought into the country are known as import.

The major commodities exported from India include jewellery and gems, agriculture and allied products, chemicals, etc. The major commodities imported to India include electronics, machinery, petroleum and crude products, gems and jewellery, base metals, etc. Trade balance is the difference between export and import.

• When exports exceed imports, it is termed as a favourable trade balance.
• When imports exceed exports, it is known as the unfavourable trade balance.

The final section in the chapter on the Lifelines of National Economy deals with the importance of the tourism sector. In India, more than 15 million people are a direct part of the tourism sector. Tourism in India helps in:

• Promoting national integration
• Providing support to local handicrafts
• Promoting understanding about Indian heritage and culture

Foreign tourists visit India for eco-tourism, adventure tourism, heritage tourism, cultural tourism, business tourism, and medical tourism.

• Lifelines of National Economy Class 10 MCQ Question 1. What is the name given to the International Airport at Kolkata? (a) Jawaharlal Nehru (b) Meenambakkam (c) Rajiv Gandhi (d) Netaji Subhash Chandra Bose

2. Which one of the following is an inland riverine port? [Delhi 2012] (a) Kandla (b) Kolkata (c) Mumbai (d) Tuticorin

3. Which one of the following is not the means of mass communication? (a) Cards and envelopes (b) Radio (c) Newspaper (d) Films

4. The longest pipeline connects (a) Hazira to Kanpur (.b) Salaya to Jalandhar (c) Flazira to Jagdishpur (d) Koyali to Haldia

We hope that through these detailed notes, you have understood the chapter on Lifelines of National Economy. Unsure about selecting a stream after 10th? Our Leverage Edu experts are here to help you choose the best stream based on your choices and future goals. Sign up for a free session with us today!

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News from the Columbia Climate School

How Climate Change Impacts the Economy

The Fourth National Climate Assessment , published in 2018, warned that if we do not curb greenhouse gas emissions and start to adapt, climate change could seriously disrupt the U.S. economy. Warmer temperatures, sea level rise and extreme weather will damage property and critical infrastructure, impact human health and productivity, and negatively affect sectors such as agriculture, forestry, fisheries and tourism. The demand for energy will increase as power generation becomes less reliable, and water supplies will be stressed. Damage to other countries around the globe will also affect U.S. business through disruption in trade and supply chains.

A recent report  examined how climate change could affect 22 different sectors of the economy under two different scenarios: if global temperatures rose 2.8˚ C from pre-industrial levels by 2100, and if they increased by 4.5˚ C. The study projected that if the higher-temperature scenario prevails, climate change impacts on these 22 sectors could cost the U.S. $520 billion each year. If we can keep to 2.8˚ C, it would cost $224 billion less. In any case, the U.S. stands to suffer large economic losses due to climate change, second only to India, according to another study .

We are already seeing the economic impacts of the changing climate. According to Morgan Stanley, climate disasters have cost North America $415 billion in the last three years, much of that due to wildfires and hurricanes.

In 2017, Texas’s estimated losses from Hurricane Harvey were $125 billion; Hurricane Sandy caused about $71 billion of damages in 2012. And while it’s not yet possible to directly link climate change to hurricanes, warmer temperatures and higher sea levels are known to enhance their intensity and destructiveness.

“Science advances also give us more detailed spatial information to say which assets and operations are in harm’s way with climate change—for example say, just how many buildings will be inundated due to sea level rise,” said climatologist Radley Horton, associate research professor at Lamont-Doherty Earth Observatory. But the indirect economic impacts may be felt long before an actual disaster.

“For example, it’s not just whether a building is underwater or not,” he said. “What’s important are the harder-to-define things like when does societal risk perception shift? It may be that buildings lose their value before the water actually arrives, once people realize that eventually the water’s going to arrive. We need deeper thinking about the interconnection between physical and social systems.”

Here are some of the many ways that climate change will likely affect our economy, both directly and indirectly.

Agriculture

The sector most vulnerable to climate risk is agriculture.

Environmental economist Geoffrey Heal, a professor in the Columbia Business School, explained that although agriculture makes up a fairly small part of the total U.S. economy, “locally these effects could be big. There are about a dozen states in the Midwest that are very dependent on agriculture and they could take quite a big hit.”

They already have. Extreme rainfall events have increased 37 percent in the Midwest since the 1950s, and this year, the region has experienced above normal amounts of rain and snowmelt that have caused historic flooding.

Many fields have washed away and livestock have drowned; Nebraska alone lost $440 million worth of cattle, and as of March, Iowa had suffered $1.6 billion in losses.

The National Oceanic and Atmospheric Administration (NOAA) expects the coming months to bring even more flooding, which could impact our food supply. To date, farmers have only planted 67 percent of their corn crop compared to last June, when they had planted 96 percent. This lost yield could cause prices for animal feed and ethanol to rise, and potentially disrupt marketplaces at home and abroad. As a result of climate change impacts, the Midwest is projected to lose up to 25 percent of its current corn and  soybean yield by 2050.

In addition to flooding, increased heat and drought will likely reduce crop yields. According to a 2011  National Academy of Sciences report , for every degree Celsius the global thermostat rises, there will be a 5 to 15 percent decrease in overall crop production. Many commodity crops such as corn, soybean, wheat, rice, cotton, and oats do not grow well above certain temperature thresholds. In addition, crops will be affected by less availability of water and groundwater, increased pests and weeds, and fire risk. And as farmers struggle to stay afloat by finding ways to adapt to changing conditions, prices will likely increase and be passed along to consumers.

Infrastructure

Much of our society’s critical infrastructure is at risk from flooding. “Sea level rise could potentially cause a loss of value of assets in the trillions of dollars—probably anywhere from two to five trillion dollars—by the end of the century,” said Heal. “That’s loss from damage to housing, damage to airports on the coasts, damage to docks, the railway line that runs up and down the East Coast all of which is within a few feet of sea level, damage to I-95 which runs also along the coast. And that’s just the East Coast. If you take a global perspective, this is repeated around the world.” Much of this infrastructure will likely need to be repaired or replaced.

Military bases are also vulnerable. According to a  2016 report published by the Center for Climate and Security policy institute, sea level rise could flood parts of military bases along the East and Gulf coasts for up to three months a year as soon as 2050. Inland military installations near rivers are also vulnerable, because they can overflow with heavy precipitation, which is expected to become more common as the atmosphere warms. Extreme weather will necessitate more maintenance and repair for runways and roads, infrastructure and equipment.

In addition, our communication systems will be affected. A 2018 study   found that over 4,000 miles of fiber optic cable as well as data centers, traffic exchanges and termination points — the lifeblood of the global information network — are at risk from sea level rise. According to NOAA’s sea level rise projections, this infrastructure could be underwater by 2033 because most of it is buried along highways and coastlines. When it was built 25 years ago, climate change was not a concern, so while the cables are water resistant, they are not waterproof. New York, Miami and Seattle and large service providers including CenturyLink, Intelliquent and AT&T are most at risk. Threats to the internet infrastructure could have huge implications for businesses in the U.S.

Human health and productivity

If temperatures rise 4.5˚ C by 2090, 9,300 more people will die in American cities due to the rising heat. The annual losses associated with extreme temperature-related deaths alone are projected to be $140 billion.

Increasing warmth and precipitation will also add to the risk of waterborne and foodborne diseases and allergies, and spur the proliferation of insects that spread diseases like Zika, West Nile, dengue and Lyme disease into new territories. Extreme weather and climate-related natural disasters can also exacerbate mental health issues. The most vulnerable populations, such as the elderly, children, low-income communities and communities of color, will be most affected by these health impacts.

Temperature extremes are also projected to cause the loss of two billion labor hours each year by 2090, resulting in $160 billion of lost wages. Because of heat exposure, productivity in the Southeast and Southern Great Plains regions is expected to decline by 3 percent, and some counties of Texas and Florida could lose more than 6 percent of labor hours each year by 2100. According to a 2014 Rhodium Group study, the largest climate change-related economic losses in the U.S. will be from lost labor productivity.

Two billion dollars could be lost in winter recreation due to less snow and ice. For example, rapid warming in the Adirondack Mountains could decimate the winter activity sector, which makes up 30 percent of the local economy.

In addition, as water temperatures increase, water quality could suffer due to more frequent and more intense algae blooms, which can be toxic, thus curtailing recreational water activities and freshwater fishing. More frequent and severe wildfires will worsen air quality and discourage tourism. Sea level rise could submerge small islands and coastal areas, while deforestation and its destructive impacts on biodiversity could make some tourist destinations less attractive.

Businesses and the financial market

Climate change and its impacts across the globe will threaten the bottom line of businesses in a variety of ways. The frequency and intensity of extreme weather, both in the U.S. and in other countries, can damage factories, supply chain operations and other infrastructure, and disrupt transport. Drought will make water more expensive, which will likely affect the cost of raw materials and production. Climate volatility may force companies to deal with uncertainty in the price of resources for production, energy transport and insurance. And some products could become obsolete or lose their market, such as equipment related to coal mining or skiing in an area that no longer has snow.

Whether in the U.S. or abroad, new regulations such as carbon pricing and subsidies that favor a competitor may affect a business’s bottom line. A company’s reputation could also suffer if it’s seen as doing something that hurts the environment. And investors and stakeholders are increasingly worried about the potential for “stranded assets”—those that become prematurely obsolete or fall out of favor, and must be recorded as a loss, such as fossil fuels that many believe should stay in the ground or real estate in a newly designated flood plain.

In 2018, the Carbon Disclosure Project asked more than 7,000 companies to assess their financial risks from climate change. The CDP found that, unless they took preemptive measures, 215 of the world’s 500 biggest companies could lose an estimated one trillion dollars due to climate change, beginning within five years. For example, Alphabet (Google’s parent company) will likely have to deal with rising cooling costs for its data centers. Hitachi Ltd.’s suppliers in Southeast Asia could be disrupted by increased rainfall and flooding. Some companies have already been impacted by climate change-related losses. Western Digital Technologies, maker of hard disks, suffered enormous losses in 2011 after flooding in Thailand disrupted its production.

PG&E became liable for fire damages and had to file for bankruptcy after its power lines sparked California’s deadliest wildfire last fall. And GE cost its investors $193 billion between 2015 and 2018 because it overestimated demand for natural gas and underestimated the transition to renewable energy.

“The movement away from fossil fuels will have a big impact which could affect banks and investment firms that have relationships with the fossil fuel industry,” said Heal. “For example, the stock market value of the U.S. coal industry in 2011 was something like $37 billion. Today it’s about $2 billion. So anybody that lent a lot of money to the coal industry 10 years back would be in trouble. One of the things worrying those in the financial field is that this could happen to the oil and gas industry. So people who have invested in them or lent money to them are potentially at risk.”

Climate change and opportunity

The good news is that climate change also presents business opportunities. The Carbon Disclosure Project reported that 225 of the world’s 500 biggest companies believe climate change could generate over $2.1 trillion in new business prospects.

There will be more opportunity in clean energy, resilient and green buildings, and energy efficiency. Hybrid and electric vehicle production and the electric public transit sector are expected to grow. Construction of green infrastructure and more resilient coastal infrastructure could create many new jobs. Carbon capture and sequestration and uses of captured CO2  present opportunities, especially in light of the new 45Q federal tax credits. In addition, there are forward-thinking new businesses—witness the dramatic rise of Beyond Meat, the company selling plant-based burgers at Carl’s Jr. and A&W.

As the Arctic sea ice melts, new shipping lines will open up for trade, substantially cutting transport time. The warming Arctic could also offer more prospects for oil and gas drilling. Weather satellites and radar technology will be in demand to monitor extreme weather. Air conditioning and cooling products will be needed around the world. Biotech companies are developing new crops that are resistant to climate change impacts. Pharmaceutical companies expect increased demand for drugs to combat diseases such as malaria and dengue and other infectious diseases. And the market for military equipment and private security services may expand because the scarcity of resources could trigger civil unrest and conflict.

What individuals, businesses and governments can do to protect themselves

How much climate change will hurt the economy depends on what measures we take to adapt to and prepare for it.

Individuals

Individuals need to consider the implications of climate change when choosing where to spend and invest their money. And be aware that while a particular risk may not seem to be factored into prices yet, things could turn on a dime when the realization of risk sinks in, resulting in a massive redistribution of wealth. So it’s best not to buy or move to an area near wild lands, which have a higher risk of wildfires. Don’t move into a flood zone or buy real estate in an area that’s vulnerable to sea level rise. And in any case, purchase flood and fire insurance, and diversify your investments.

Individuals should also think about different opportunities in terms of new places that people are moving to. And, if possible, people who work outdoors in construction, agriculture or tourism should consider alternative jobs within the sector or new industries to work in.

Businesses and financial entities

Businesses need to scrutinize their operations carefully. “There’s a groundswell towards the view that any companies that fail to study their exposure to extreme weather and fail to disclose the types of vulnerabilities, including indirect ones, are going to have a hard time in the future,” said Horton. “Are companies looking at what’s coming down the road and making strategies to deal with it? I think investors are going to demand that and the companies that don’t do that are going to have trouble getting underwriting, getting infrastructure funded by the Moody’s of the world, and getting insurance.” He added that he’s seen a change in the last three or four years in what his students are demanding and believes that young people in the future will not work for companies that are not thinking about climate change.

Banks and funds need to analyze where their investments are and see if they are vulnerable to climate change. Have they invested in someone who has coastal property, or given a loan to a fossil fuel company or in agriculture operations that might be affected by climate change? Sixty-three percent of financial risk managers surveyed now believe climate change is a major concern. As a result, “The total value of funds that have integrated environmental, social and governance factors into their investment process has more than quadrupled since 2014, rising to $485 billion as of April,” reported the Wall Street Journal .

Governments

Governments should proactively think about the risks their communities face before disaster strikes.

They should be investing in resiliency measures such as hardening infrastructure, improving water resources, building redundancy into important systems, moving people out of harm’s way and improving health care services. “You want to do it before the disaster but you also need to be cognizant that the only time people will listen seems to be right after a disaster,” said Horton. “Those are also the times when money’s available to rebuild.”

Government leaders are currently debating whether the country can afford the Green New Deal (an ambitious plan to address climate change) or something like it. The question should be, ‘can we afford not to afford it?’ Nobel Prize-winning economist Joseph Stiglitz, a professor at Columbia University, wrote in an op ed , “We will pay for climate breakdown one way or another, so it makes sense to spend the money now to reduce emissions rather than wait until later to pay a lot more for the consequences… It’s a cliché, but it’s true: An ounce of prevention is worth a pound of cure.”

Related Posts

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How Greenland’s Ice Holds Clues to Our Future

Combating Microplastics With AI Real-Time Monitoring

Columbia Climate School has once again been selected as university partner for Climate Week NYC, an annual convening of climate leaders to drive the transition, speed up progress and champion change. Join us for events and follow our coverage .

Degrowth is the most effective solution. Eco-sufficiency and life quality are more important than profit maximization. Please read https://www.degrowth.info or https://en.wikipedia.org/wiki/Degrowth

how os quality of life gonna go up when people have less resources from degrowth

Don’t state the obvious. You said the quite part out loud.

Well, many people will have the chance to grow and adapt, making this obvious statment stupid. Many have already died, and many more will, but we can eventually get better. I don’t have much faith though.

Hey there, this was a very informative and we’ll written article. Thank you kindly

Right. Helps a lot in an essay!

I used this for a essay and this helped a lot! Thanks!

Hello, This is a big problem economically and globally. Climate change has impacted us in so many ways.

https://www.cbsnews.com/video/climate-refugees-the-quest-for-a-haven-from-extreme-weather-events/#x

Is this all rights reserved? Can I use some info from here?

why was this made, and how the hell does texas have enough buildings to cost 71 billion dollars in damages.

because they built buildings

To Renee Cho,

I first want to start off by saying thank you for sharing your knowledge of this subject with the world. It’s extremely important to share these types of ideas publicly, and it’s helpful when trying to formulate an opinion on this subject when you aren’t an expert on it.  I agree with your article. I think Climate change, if not dealt with, can have a bigger effect on our lives than we often think. Yes, the climate and earth would suffer, but so will our economy in the years leading up to the point of no return. The damage to the supply chain and factories, which you mentioned, is a huge deal. If our supply can’t withstand the strength of the demand in the future, then we will have more problems than just climate change. Because of the genera; nature of the market however, businesses will start to see that renewable energy is more profitable, and the market will start to shift. If fossil fuels become obsolete, companies wont run the risk of receiving a bad reputation for using them. I hope that this is what our economy will look like soon, instead of companies holding onto fossil fuels and other things that are harmful to our earth. They can’t make money if the world isn’t safe to make it on.  Another thing I found interesting is how instead of just focusing on what businesses need to do to mitigate this issue, you also target the individual consumer. Individuals play a big part in the market and economic health, so the choices they make can really make a difference in how climate change affects our economy.  Everyone needs to read this article, or articles like this; it’s crucial that you understand how not only the world is affected by this issue, but how you as an individual are affected as well. 

Can i use the above stated information for an article to be published in our college Magazine

This article is great! very informative can i use some of the content for my assignment?

All people must start to learn to control and reduce emission of greenhouse gases.

This was incredibly helpful, thank you!!

I like the article! it’s very descriptive.

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What is economic growth? And why is it so important?

The goods and services that we all need are not just there – they need to be produced – and growth means that their quality and quantity increase..

Good health, a place to live, access to education, nutrition, social connections, respect, peace, human rights, a healthy environment, and happiness. These are just some of the many aspects we care about in our lives.

At the heart of many of these aspects that we care about are needs for which we require particular goods and services . Think of those that are needed for the goals on the list above – the health services from nurses and doctors, the home you live in, or the teachers who provide education.

Poverty, prosperity, and growth are often measured in monetary terms, most commonly as people’s income. But while monetary measures have some important advantages, they have the big disadvantage that they are abstract. In the worst case, monetary measures – like GDP per capita – are so abstract that we forget what they are actually about: people’s access to goods and services.

The point of this text is to show why economic growth is important and how the abstract monetary measures tell us about the reality of people’s material living conditions around the world and throughout history:

• In the first part, I want to explain what economic growth is and why it is so difficult to measure.
• In the second part, I will discuss the advantages and disadvantages of several measures of growth, and you will find the latest data on several of these measures so that we can see what they tell us about how people’s material living conditions have changed.

What are these goods and services that I’m talking about?

Have a look around yourself right now. Many of the things you see are products that were produced by someone so that you can use them: the trousers you are wearing, the device you are reading this on, the electricity that powers it, the furniture around you, the toilet that is nearby, the sewage system it is connected to, the bus or car or bicycle you took to get where you are, the food you had this morning, the medications you will receive when you get sick, every window in your home, every shirt in your wardrobe, and every book on your shelf.

At some point in the past, many of these products were not available. The majority did not have access to the most basic goods and services they needed. A recent study on the history of global poverty estimates that just two centuries ago, roughly three-quarters of the world "could not afford a tiny space to live, food that would not induce malnutrition, and some minimum heating capacity.” 1

Let’s look at the history of the last item on that list above, books.

A few centuries ago, the only way to produce a book was for a scribe to copy it word-for-word by hand. Book production was a slow process; it took a scribe about eight months of daily work to produce a single copy of the Bible. 2

It was so laborious that only very few books were produced. The chart shows the estimates of historians. 3

But then, in the 15th century, the goldsmith Johannes Gutenberg combined the idea of movable letters with the mechanism that he knew from the wine presses in his hometown. He developed the printing press. Gutenberg developed a new production technology, and it changed things dramatically. Instead of spending months to produce one book, a worker was now able to produce several books a day.

As the printing press spread across Europe, book production soared. Books, which were previously only available to a tiny elite, became available to more and more people.

This is one example of how growth is possible and what economic growth is : an increase in the production of goods and services that people produce for each other.

A list of goods and services that people produce for each other

Before we get to a more detailed definition of economic growth, it’s helpful to remind ourselves of the astonishingly wide range of goods and services that people produce. I think this is helpful because measures of economic output can easily become abstract. This abstraction means we easily lose the mental connection to the goods and services such measures actually talk about.

This list of goods and services isn’t meant as a definitive list, but it helped me to think about the relevance of poverty and growth: 4

At home: Light in your home at night; the sewage system; a shower; vacuum cleaner; fridge; heating; air conditioning; electricity; windows; a toilet – even a flush toilet; soap; a balcony or a garden; running water; warm water; cutlery and dishes; a hut – or even a warm apartment or house; an oven; sewing machine; a stove (that doesn’t poison you ); carpet; toilet paper; trash bags; music recordings or even online streaming of the world’s music and film; garbage collection; radio; television; a washing machine; 5 furniture; telephone; a comfortable bed, and a room for one’s own.

Food: The most fundamental need is to have enough food. For much of human history, a large share of people suffered from hunger , and millions still do .

But we also need to have a richer and more varied diet to get all of the nutrients we need. Unfortunately, billions still suffer from micronutrient deficiency .

Also, think of clean drinking water; reliable markets and stores with a wide range of available goods; food that rarely poisons you (pasteurized milk, for example); spices; tea and coffee; kitchen utensils and practical ingredients (from a bag of flour to canned soups or a yogurt); chocolate and sweets; fresh fruit and vegetables; bread; take-away food or the possibility to go to a restaurant; ways to protect your food from spoiling (from the cold chain that delivers the goods to the cellophane to wrap it with); wine or beer; fertilizer ( very important); and tractors to work the fields.

Knowledge: Education from primary up to university level; books; data that allows us to understand the world around us; newspapers; vocational training; kindergartens; and scientific knowledge to understand ourselves and the world around us.

Infrastructure: Public transportation with buses, subways, and trains; roads; paved roads; airplanes; bridges; financial services (including bank accounts, ATMs, and credit cards); cities; a network of competent workers that can help you to fix problems; postal services (that delivers fast); national parks; street cleaning; public swimming pools (even private pools); firefighters; parks; online shopping; weather forecasts; and a waste management system.

Tools and technologies: Pencils, ballpoint pens, and paper; lawnmowers; cars; car mechanics; bicycles; power tools like drills (even battery-powered ones); a watch; computers and laptops; smartphones (with GPS and a good camera); being able to stay in touch with distant friends or family members (or even visiting them); GPS; batteries; telephones and mobiles; video calls; WiFi; and the internet right here.

Social services: Caretakers for those who are disabled, sick, or elderly; protection from crime; non-profit organizations financed by the public, by donations or by philanthropies; insurance (against many different risks); and a legal system with judges and lawyers that implement the rule of law.

There is also a wide range of transfer payments, which in themselves are not services (they are transfers) but which become more affordable as a society becomes more prosperous: sick leave and disability benefits; unemployment benefits; and being able to help others with a regular donation of some of your income to an effective charity . 6

Life and free time : tents; travel and holidays; surfboards; skis; board games; hotels; playgrounds; children’s toys; courses to learn hobbies (from painting to musical instruments or courses on the environment around us); a football; pets; the cinema, theater or a music concert; clothes (even comfortable and good-looking ones that keep you warm and protect you from the rain); shoes (even shoes for different purposes); shoe repair; the contraceptive pill and the ability to choose if and when to have children; sports classes from rock climbing to pilates and yoga; cigarettes (not all goods that people produce for each other are good for them); 7 a musical instrument; a camera; and parties to celebrate life.

Health and staying well: Dentists; antibiotics; surgeries; anesthesia; mental health care from psychologists and psychiatrists; vaccines; public sewage; a haircut; a massage; midwives; ambulances; modern medicine; band-aids; pharmaceutical drugs; sanitary pads; toothbrushes; dental floss (some do floss); disinfectants; glasses; sunglasses; contact lenses; hearing aids; and hospitals – including very well-equipped, modern hospitals that offer CT scans, which include intensive care units and allow heart or brain surgery or organ transplants.

Specific needs and wishes: Most of the products listed above are generally helpful to people. But often, the goods and services that are most important to one individual are very specific.

As I’m writing this, I have a big cast on my left leg after I broke it. These days, I depend on products that I had no use for just three weeks ago. To move around, I need two long crutches, and to prevent thrombosis, I need to inject a blood thinner every day. After I broke my leg, I needed the service of nurses and doctors. They had to rely on a range of medical equipment, such as X-ray machines. To get back on my feet, I might need the service of physiotherapists.

We all have very specific needs or wishes for particular goods and services. Some needs arise from bad luck, like an injury. Others are due to a new phase in life – think of the specific goods and services you need when you have a baby or when you take care of an elderly person. And yet others are due to specific interests – think of the needs of a fisherman, or a pianist, or a painter.

All of these goods and services do not just magically appear. They need to be produced. At some point in the past, the production of most of them was zero, and even the most essential ones were extremely scarce. So, if you want to know what economic growth means for your life, look at the list above.

What is economic growth?

So, how can we define what economic growth is?

A definition that can be found in so many publications that I don’t know which one to quote is that economic growth is “an increase in the amount of goods and services produced per head of the population over a period of time.”

The definition in the Oxford Dictionary is almost identical: “Economic growth is the increase in the production of goods and services per head of population over a stated period of time”. And the definition in the Cambridge Dictionary is similar. It defines growth as “an increase in the economy of a country or an area, especially of the value of goods and services the country or area produces.”

In the following footnote, you find more definitions. Bringing these definitions together and taking into account the economic literature more broadly, I suggest the following definition: Economic growth is an increase in the quantity and quality of the economic goods and services that a society produces.

I prefer a definition that is slightly longer than most others. If you want a shorter definition, you can speak of ‘products’ rather than ‘goods and services’, and you can speak of ‘value’ rather than mentioning both the quantity and quality aspects separately.

The most important change in quantity is from zero to one when a new product becomes available. Many of the most important changes in history became possible when new goods and services were developed; think of antibiotics, vaccines, computers, or the telephone.

You find more thoughts on the definition of growth in the footnote. 8

What are economic goods and services?

Many definitions of economic growth simply speak of the production of ‘goods and services’ collectively. This sidesteps a key difficulty in its definition and measurement. Economic growth is not concerned with all goods and services but with a subset of them: economic goods and services.

In everything we do – even in our most mundane activities – we continuously ‘produce’ goods and services in some form. Early in the morning, once we’ve brushed our teeth and made ourselves toast, we have already produced one service and one good. Should we count the tooth-brushing and the toast-making towards the economic production of the country we live in? The question of where to draw the line isn’t easy to answer. But we have to draw the line somewhere. If we don’t, we end up with a concept of production that is so broad that it becomes meaningless; we’d produce a service with every breath we take and every time we scratch our nose.

The line that we have to draw to define the economic goods and services is called the ‘production boundary’. The sketch illustrates the idea. The production boundary defines those goods and services that we consider when we speak about economic growth.

For a huge number of goods or services, there is no question that they are of the ‘economic’ type. But for some of them, it can be complicated to decide on which side of the production boundary they fall. One example is the question of whether the production of illegal goods should be included. Another is whether production within a household should be included – should we consider it as economic production if we grow tomatoes in our backyard and make soup from them? Different authors and different measurement frameworks have given different answers to these questions. 9

There are some characteristics that are helpful in deciding on which side of the boundary a particular product falls. 10 Economic goods and services are those that can be produced and that are scarce in relation to the demand for them. They stand in contrast to free goods, like sunlight, which are abundant, or those many important aspects in our lives that cannot be produced, like friendships. 11 Our everyday language has this right: we don’t refer to the sun or our friendships as a good or service that we ‘produce’.

An economic good or service is provided by people to each other as a solution to a problem they are faced with, and this means that they are considered useful by the person who demands it.

A last characteristic that helps decide whether you are looking at an economic product is “delegability”. An activity is considered to be production in an economic sense if it can be delegated to someone else. This would include many of the goods and services on that long list we considered earlier but would exclude your breathing, for example.

Because economic goods are scarce in relation to the demand for them, human effort is required to produce them. 12 A shorter way of defining growth is, therefore, to say that it is an increase in the production of those products that people produce for each other.

The majority of goods and services on that long list above are uncontroversially of the economic type – everything from the light bulbs and furniture in your home to the roads and bridges that connect your home with the rest of the world. They are scarce in relation to the demand for them and have to be produced by someone; their production is delegable, and they are considered useful by those who want them.

It’s worth recognizing that many of the difficulties in defining the production boundary arise from the effort to make measures of economic production as comparable as possible.

To give just one concrete example of the type of considerations that make the discussion about specific definitions so difficult, let’s look at how the production boundary is drawn in the housing sector.

Imagine two countries that are identical except for one aspect: home ownership. In Country A, everyone rents their homes, and the total sum of annual rent amounts to €2 billion per year. In Country B, everyone owns their own home, and no one pays rent. To provide housing is certainly an economic service, but if we only counted monetary transactions, then we would get the false impression that the value of goods and services in Country A is €2 billion higher than in Country B. To avoid such misjudgment, the production boundary includes the housing services that are provided without any monetary transactions. In National Accounts, statisticians take into account the “imputed rental value of owner-occupied housing” – those households who own their home get assigned an imputed rental value. In the imagined scenario, these imputed rents would amount to €2 billion in Country B so that the prosperity of people in these two countries would be judged to be identical.

It is the case more broadly that National Account figures (like GDP) do include important non-market goods and services that are not included in household survey measures of people’s income. GDP does not only include the housing services by owner-occupied housing but also the provision of most goods and services that are provided by the government or nonprofit institutions.

How can we measure economic growth?

Many discussions about economic growth are extraordinarily confusing. People often talk past one another.

I believe the key reason for this is that the discussion of what economic growth is gets muddled up with how it is measured .

While it is straightforward enough to define what growth is, measuring growth is very, very difficult.

In the worst cases, measures of growth are mixed up with a definition of growth. Growth is often measured as an increase in income or inflation-adjusted GDP per capita. But these measures are not the definition of it – just like life expectancy is a measure of population health but is certainly not the definition of population health.

To see how difficult it is to measure growth, take a moment to think about how you would measure it. How would you determine whether the quantity and quality of all economic goods and services produced by a society increased or decreased over time?

Finding a measure means that you have to find a way to express a huge amount of relevant information in a single metric. As the sketch shows, you have to first measure the quantity and quality of all the many, many goods and services that get produced and then find a way to aggregate all of these measurements into one summarizing metric. No matter what measure you propose for such a difficult task, there will always be problems and shortcomings in any proposal you might make.

In the following section, I will show four possible ways of measuring growth and present some data for each of them to see how they can inform us about the history of material living conditions.

Measuring economic growth by tracking access to particular goods and services

One possible way to measure growth is to make a list of some specific products that people want and to see what share of the population has access to them.

We do this very often at Our World in Data . The chart here shows the share of the world population that has access to four basic resources. All of these statistics measure some particular aspect of economic growth.

You can switch this chart to any country in the world via the “Change country” option. You will find that, judged by this metric, some countries achieved rapid growth – like Indonesia – while others only saw very little growth, like Chad.

The advantage of measuring growth in this way is that it is concrete. It makes clear what exactly is growing, and it’s clear which particular goods and services people gain access to.

The downside is that it only captures a small part of economic growth. There are many other goods and services that people want in addition to water, electricity, sanitation, and cooking technology. 13

You could, of course, expand this approach of measuring growth to many more goods and services, but this is usually not done for both practical and ethical considerations:

One practical reason is that a list of all the products that people value would be extremely long. Keeping lists that track people’s access to all products would be a daunting task: hundreds of different toothbrushes, thousands of different dentists, hundreds of thousands of different dishes in different restaurants, and many millions of different books. 14 If you wanted to measure growth across all goods and services in this way, you’d soon employ half the country in the statistical office.

In practice, any attempt to measure growth as access to particular products, therefore, means that you look only at a relatively small number of very particular goods and services that statisticians or economists are interested in. This is problematic for ethical reasons. It should not be up to the statisticians or economists to determine which few products should be considered valuable.

You might have realized this problem already when you read my list at the beginning of this text. You might have disagreed with the things that I put on that list and thought that some other goods and services were missing. This is why it is important to track incomes and not just access to particular goods: measuring people’s income is a way of measuring the options that they have rather than the choices that they make. It respects people’s judgment to decide for themselves what they find most important for their lives.

On our site, you find many more such metrics of growth that capture whether people have access to particular goods and services:

• This chart shows the share of US households having access to specific technologies.
• This chart shows the share that has health insurance.
• This chart shows access to schools.

Measuring economic growth by tracking the ratio between people’s income and the prices of particular goods and services

To measure the options that a person’s income represents, we have to compare their income with the prices of the goods and services that they want. We have to look at the ratio between income and prices.

The chart here does this for one particular product – books – and brings us back to the history of growth in the publishing sector that we started with. 15 Shown is the ratio between the average income that a worker receives and the price of a book. It shows how long the average worker had to work to buy one book. Note that this data is plotted on a logarithmic axis.

Before the invention of the printing press in the 15th century, the price was often as high as several months of work. The fact that books were unaffordable for almost everyone should not be surprising. It corresponds to what we’ve seen earlier that it took a scribe several months to produce a single book.

The chart also shows how this changed when the printing press increased the productivity of publishing. As the labor required to produce a book declined from many months of work to less than a day, the price fell from months of wages to mere hours.

This shows us how an innovation in technology raises productivity and how an increase in production makes it more affordable. How it increases the options that people have.

Global inequality: How do incomes compare in countries around the world?

In the previous section, we measured growth as the ratio between income and the price of one particular good. But of course, we could do the same for all the many goods and services that people want. This ratio – the ratio between the nominal income that people receive and the prices that people have to pay for goods and services – is called ‘real income’ . 16

Real income = Nominal income / price of goods and services

Real income grows when people’s nominal income increases or when the prices of goods and services decrease.

In contrast to many of the other metrics on Our World in Data, a person’s real income does not matter for its own sake but because it is a means to an end. A means to many ends, in fact.

Economic growth – measured as an increase in people’s real income – means that the ratio between people’s income and the prices of what they can buy is increasing: goods and services become more affordable, and people become less poor. It is because a person has more choices as their income grows that economists care so much about these monetary measures of prosperity.

The two most prominent measures of real income are GDP per capita and people’s incomes, as determined through household surveys.

They are shown in this chart.

Before we get back to the question of economic growth, let’s see what these measures of real income tell us about the economic inequality in the world today.

Both measures show that global inequality is very large. In a rich country like Denmark, an average person can purchase goods and services for $54 a day, while the average Ethiopian can only afford goods and services that cost $3 per day.

Both measures of real incomes in this chart are measured in international dollars, which means that they take into account the level of prices in each country (using purchasing power parity conversion factors). This price adjustment is done in such a way that one international-$ is equivalent to the purchasing power of one US-$ in the US . An income of int.-$3 in Ethiopia, for example, means that it allows you to purchase goods and services in Ethiopia that would cost US-$3 in the US . All dollar values in this text are given in international dollars, even though I often shorten it to just the $-sign.

If you are living in a rich country and you want to have a sense of what it means to live in a poor country – where incomes are 20 times lower – you can imagine that the prices for everything around you suddenly increase 20-fold. 17 If all the things you buy suddenly get 20-times more expensive your real income is 20-times lower. A loaf of bread doesn’t cost $2 but $40, a pair of jeans costs $400, and an old car costs $40,000. If you ask yourself how these price increases would change your daily consumption and your day-to-day life, you can get a sense of what it means to live in a poor country.

The two shown measures of real income differ:

• The data on the vertical axis is based on surveys in which researchers go from house to house and ask people about their economic situation. In some countries, people are asked about their income, while in other countries, people are asked about their expenditure – expenditure is income minus savings. In poor countries, these two measures are close to each other since poor people do not have the chance to save much.
• On the other hand, GDP per capita starts at the aggregate level and divides the income of the entire economy by the number of people in that country. GDP per capita is higher than per capita survey income because GDP is a more comprehensive measure of income. As we’ve discussed before, it includes an imputed rental value of owner-occupied housing and other differences, such as government expenditure.

Income as a measure of economic prosperity is much more abstract than the metrics we looked at previously. The comparison of incomes of people around the world in this scatterplot measures options, not choices. It shows us that the economic options for billions of people are very low. The majority of the world lives on very low incomes of less than $20, $10, or even $5 per day. In the next section, we’ll see how poverty has changed over time.

• GDP per capita vs. Daily income of the poorest 10%
• GDP per capita vs. Daily average income

Global poverty and growth: How have incomes changed around the world?

Economic growth, as we said before, is an increase in the production of the quantity and quality of the economic goods and services that a society produces. The total income in a society corresponds to the total sum of goods and services the society produces – everyone’s spending is someone else’s income. This means that the average income corresponds to the level of average production, so that the average income in a society increases when the production of goods and services increases.

Average production = average income

In this final section, let’s see how incomes have changed over time, first as documented in survey incomes and then via GDP per capita.

Measuring economic growth by tracking incomes as reported in household surveys

The chart shows the income of people around the world over time, as reported in household surveys. It shows the share of the world population that lives below different poverty lines: from extremely low poverty lines up to $30 per day, which corresponds to notions of poverty in high-income countries .

Many of the poorest people in the world rely on subsistence farming and do not have a monetary income. To take this into account and make a fair comparison of their living standards, the statisticians who produce these figures estimate the monetary value of their home production and add it to their income.

Again, the prices of goods and services are taken into account: these are measures of real incomes. As explained before, incomes are adjusted for price differences between countries, and they are also adjusted for inflation. As a consequence of these two adjustments, incomes are expressed in international dollars in 2017 prices, which means that these income measures express what you would have been able to buy with US dollars in the US in 201 7.

Global economic growth can be seen in this chart as an increasing share of the population living on higher incomes. In 2000 two thirds of the world lived on less than $6.85 per day. In the following 19 years, this share fell by 22 percentage points.

In 2020 and 2021 — during the economic recession that followed the pandemic — the size of the world economy declined, and the share of people in poverty increased . As soon as global data for this period is available, we will update this chart.

The data shows that global poverty has declined, no matter what poverty line you choose. It also shows that the majority of the world still lives on very low incomes. As we’ve seen, we can describe the same reality from the production side: the global production of the goods and services that people want has increased, but there is still not enough production of even very basic products. Most people in the world do not have access to them.

An advantage of household survey data over GDP per capita is that it captures the inequality of incomes within a country. You can explore this inequality with this chart by switching to see the data for an individual country via the ‘Change country’ button.

Measuring economic growth by tracking GDP per capita

GDP per capita is a broader measure of real income, and in contrast to survey income, it also takes government expenditures into account. A lot of thinking has gone into the construction of this very prominent metric so that it is comparable not only over time but also across countries. This makes it especially useful as a measure to understand the economic inequality in the world, as we’ve seen above. 18

Another advantage of this measure is that historians have reconstructed estimates of GDP per capita that go back many centuries. This historical research is an extremely laborious task , and researchers have dedicated many years of work to these reconstructions. The ‘Maddison Project’ brings together these long-run reconstructions from various researchers, and thanks to these efforts, we have a good understanding of how incomes have changed over time.

The chart shows how average incomes in different world regions have changed over the last two centuries. Looking at the latest data, you see again the very large inequality between different parts of the world today. You now also see the history of how we got here: small increases in production in some world regions and very large increases in those regions where people have the highest incomes today.

One of the very first countries to achieve sustained economic growth was the United Kingdom. In this chart, we see the reconstructions of GDP per capita in the UK over the last centuries.

It is no accident that the shape of this chart is very similar to the chart on book production at the beginning of this text – very low and almost flat for many generations and then quickly rising. Both of these developments are driven by changes in production.

Average income corresponds to average production, and societies around the world were able to produce very few goods and services in the past. There were no major exceptions to this reality. As we see in this chart, global inequality was much lower than today: the majority of people around the world were very poor.

To get a sense of what this means, you can again take the approach we’ve used to understand the inequality in the world today. When incomes in today’s rich countries were 20 times lower, it was as if all the prices around you today would suddenly increase 20-fold. But in addition to this, you have to consider that all the goods and services that were developed since then disappeared – no bicycle, no internet, no antibiotics. All that’s left for you are the goods and services of the 17th century, but all of them are 20 times more expensive than today. The majority of people around the world, including in today’s richest countries, live in deep poverty.

Just as we’ve seen in the history of book production, this changed once new production technologies were introduced. The printing press was an exceptionally early innovation in production technology; most innovations happened in the last 250 years. The starting point of this rise out of poverty is called the Industrial Revolution.

The printing press made it possible to produce more books. The many innovations that made up the Industrial Revolution made it possible to increase the production of many goods and services. Compare the effort that it takes for a farmer to reap corn with a scythe to the possibilities of a farmer with a tractor or a combined harvester, or think of the technologies that made overland travel faster – from walking on foot to traveling in a horse buggy to taking the train or car; or think of the effort it took to build those roads that the buggies once traveled on with the modern machinery that allows us to produce the corresponding public infrastructure today .

The production of a myriad of different goods and services followed trajectories very similar to the production of books – flat and low in the past and then steeply increasing. The rise in average income that we see in this chart is the result of the aggregation of all these production increases.

In the past, before societies achieved economic growth, the only way for anyone to become richer was for someone else to become poorer; the economy was a zero-sum game. In a society that achieves economic growth, this is no longer the case. When average incomes increase, it becomes possible for people to become richer without someone else becoming poorer.

This transition from a zero-sum to a positive-sum economy is the most important change in economic history (I wrote about it here ) and made it possible for entire societies to leave the extreme poverty of the past behind.

Conclusion: The history of global poverty reduction has just begun

The chart shows the global history of extreme poverty and economic growth.

In the top left panel, you can see how global poverty has declined as incomes increased; in the other eight panels, you see the same for all world regions separately. The starting point of each trajectory shows the data for 1820 and tells us that two centuries ago, the majority of people lived in extreme poverty, no matter where in the world they were at home.

Back then, it was widely believed that widespread poverty was inevitable. But this turned out to be wrong. The trajectories show how incomes and poverty have changed in each world region. All regions achieved growth – the goods and services that people need saw their production and quality increase – and the share living in extreme poverty declined. 19

This historical research was done by Michail Moatsos and is based on the ‘cost of basic needs’-approach as suggested by Robert Allen (2017) and recommended by the late Tony Atkinson. 20 The name ‘extreme poverty’ is appropriate as this measure is based on an extremely low poverty threshold. It takes us back to what I mentioned at the very beginning; this historical research tells us – as the author puts it – that three-quarters of the world "could not afford a tiny space to live, food that would not induce malnutrition, and some minimum heating capacity.”

Since then, all world regions have made progress against extreme poverty – some much earlier than others – but in particular, in Sub-Saharan Africa, the share of people living in deep poverty is still very high.

The last two centuries were the first time in human history that societies have achieved sustained economic growth, and the decline of global poverty is one of the most important achievements in history. But it is still a very long way to go.

This is what we see in this final chart. The red line shows the share of people living in extreme poverty that we just discussed. Additionally, you now also see the share living on less than $3.65, $6.85, and $30 per day. 21

The world today is very unequal, and the majority of the world still lives in poverty: 47% live on less than $6.85 per day, and 84% live on less than $30. Even after two centuries of progress, we are still in the early stages. The history of global poverty reduction has only just begun.

That the world has made substantial progress but nevertheless still has a long way to go is the case for many of the world’s very large problems. I’ve written before that all three statements are true at the same time: The world is much better, the world is awful, and the world can be much better. This is very much the case for global poverty. The world is much less poor than in the past, but it is still very poor, and it remains one of the largest problems we face.

Some writers suggest we can end poverty by simply reducing global inequality. This is not the case. I’m very much in favor of reducing global inequality, and I hope I do what I can to contribute to this. But it is important to be clear that a reduction of inequality alone would still mean that billions around the world would live in very poor conditions. Those who don’t see the importance of growth are not aware of the extent of global poverty. The production of many crucial goods and services has to increase if we want to end it. How much economic growth is needed to achieve this? This is the question I answered in this recent text .

To solve the problems we face, it is not enough to increase overall production. We also need to make good decisions about which goods and services we want to produce more of and which ones we want less of. Growth doesn’t just have a rate, it also has a direction, and the direction we choose matters – for our own happiness and for achieving a sustainable future .

I hope this text was helpful in making clear what economic growth is. It is necessary to remind ourselves of that because we mostly talk about poverty and growth in monetary terms. The monetary measures have the disadvantage that they are abstract, perhaps so abstract that we even forget what growth is actually about and why it is so important. The goods and services that we all need are not just there – they need to be produced – and economic growth means that the quality and quantity of these goods and services increase, from the food that we eat to the public infrastructure we rely on.

The history of economic growth is the history of how societies leave widespread poverty behind by finding ways to produce more of the goods and services that people need – all the very many goods and services that people produce for each other: look around you now.

Acknowledgments: I would like to thank Joe Hasell and Hannah Ritchie for very helpful comments on draft versions of this article.

Our World in Data presents the data and research to make progress against the world’s largest problems. This article draws on data and research discussed in our topic pages on Economic Inequality , Global Poverty , and Economic Growth .

Version history: In October 2023, I copy-edited this article; it was a minor update, and nothing substantial was changed.

Michail Moatsos (2021) – Global extreme poverty: Present and past since 1820. Published in OECD (2021), How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820 , OECD Publishing, Paris, https://doi.org/10.1787/3d96efc5-en .

At the time when material prosperity was so poor, living conditions were extremely poor in general; close to half of all children died .

Historian Gregory Clark reports the estimate that scribes were able to copy about 3,000 words of plain text per day.

See Clark (2007) – A Farewell to Alms: A Brief Economic History of the World. Clark (2007). In it, Clark quotes his earlier working paper with Patricia Levin as the source of these estimates. Gregory Clark and Patricia Levin (2001) – “How Different Was the Industrial Revolution? The Revolution in Printing, 1350–1869.”

There are about 760,000 words in the bible (it differs between various translations and languages; here is an overview of some translations).

This implies that the production of one copy of the Bible meant 253.3 days (8.3 months) of daily work.

Copying the text was not the only step in the production process for which productivity was low. The ink had to be made, parchment had to be produced and cut, and many other steps involved laborious work.

Wikipedia’s article about scribes reports sources that estimate that the production time per bible was even longer than 8 months.

Clark himself states in the same publication that “Prior to that innovation, books had to be copied by hand, with copyists on works with just plain text still only able to copy 3,000 words per day. Producing one copy of the Bible at this rate would take 136 man-days.” Since the product of 136 and 3000 is only 408,000, it is unclear to me how Clark has arrived at this estimate – 408,000 words are fewer words than in the Tanakh and other versions of the bible.

The data is taken from Eltjo Buringh and Jan Luiten Van Zanden (2009) – Charting the “Rise of the West”: Manuscripts and Printed Books in Europe, a Long-Term Perspective from the Sixth through Eighteenth Centuries. In The Journal of Economic History Vol. 69, No. 2 (June 2009), pp. 409-445. Online here .

Western Europe in this study is the area of today’s Great Britain, Ireland, France, Belgium, Netherlands, Germany, Switzerland, Italy, Spain, Sweden, and Poland.

On the history and economics of book production, see also the historical work of Jeremiah Dittmar.

I’ve relied on several sources to produce this list. One source was the simple descriptions of the consumption bundles that are relied upon for CPI measurement – like this one from Germany’s statistical office . And I have also relied on the national accounts themselves.

This list is also inspired partly by this list of Gwern and I’m also grateful for the feedback that I got via Twitter to earlier versions of this list. [ Here I shared the list on Twitter ]

This is Hans Rosling’s talk on the magic of the washing machine – worth watching if you haven’t seen it.

Of course all of these transfer payments have a service component to them, someone is managing the payment of the disability benefits etc.

Because smoking causes a large amount of suffering and death I do not find cigarettes valuable, but my opinion is not what matters for a list of goods and services that people produce for each other. Whether some good is considered to be part of the domestic product depends on whether it is a good that some people want, not whether you or I want it. More on this below.

Very similar to the definitions given above is the definition that Kimberly Amadeo gives: “Economic growth is an increase in the production of goods and services over a specific period.”

“Economic growth is an increase in the production of economic goods and services, compared from one period of time to another” is the definition at Investopedia .

Alternatively, to my definition, I think it can be useful to think of economic growth as not directly concerned with the output as such but with the capacity to produce this output. The NASDAQ’s glossary defines growth in that way: “An increase in the nation's capacity to produce goods and services.”

Wikipedia defines economic growth as follows: “Economic growth can be defined as the increase in the inflation-adjusted market value of the goods and services produced by an economy over time.” Definitions that are based on how growth is measured strike me as wrong – just like life expectancy is a measure of population health and hardly the definition of population health. I will get back to this mistake further below in this text.

An aspect that I emphasize more explicitly than others is the quality of the goods and services. People obviously do just care about the number of goods, and in the literature on growth, the measurement of changes in quality is a central question. Many definitions speak more broadly about the ‘value’ of the goods and services that are produced, but I think it is worth emphasizing that growth is also concerned with a rise in the quality of goods and services.

OECD – Measuring the Non-Observed Economy: A Handbook .

The relevant numbers are not small. For the US alone, “illegal drugs add $108 billion to measured nominal GDP in 2017, illegal prostitution adds $10 billion, illegal gambling adds $4 billion, and theft from businesses adds $109 billion” if they were to be included in the US National Accounts. This is according to the report by Rachel Soloveichik (2019) – Including Illegal Activity in the U.S. National Economic Accounts . Published by the BEA.

Ironmonger (2001) – Household Production. In International Encyclopedia of the Social & Behavioral Sciences. Pages 6934-6939. https://doi.org/10.1016/B0-08-043076-7/03964-4

Or for some longer run data on the US: Danit Kanal and Joseph Ted Kornegay (2019) – Accounting for Household Production in the National Accounts: An Update, 1965–2017 . In the Survey of Current Business.

Helpful references that discuss how the production boundary is drawn (and how it changed over time) are: Lequiller and Blades – Understanding National Accounts (available in various editions) Diane Coyle (2016) – GDP: A Brief but Affectionate History https://press.princeton.edu/books/paperback/9780691169859/gdp

The definition of the production boundary by Statistics Finland

Itsuo Sakuma (2013) – The Production Boundary Reconsidered. In The Review of Income and Wealth. Volume 59, Issue 3; Pages 556-567.

Diane Coyle (2017) – Do-it-Yourself Digital: The Production Boundary and the Productivity Puzzle. ESCoE Discussion Paper 2017-01, Available at SSRN: http://dx.doi.org/10.2139/ssrn.2986725

A more general way of thinking about free goods and services is to consider them as those for which the supply is hugely greater than the demand.

Their production, therefore, has an opportunity cost, which means that if someone obtains an economic good, someone is giving up on something for it – this can either be the person themselves or society more broadly. Free goods, in contrast, are provided with zero opportunity cost to society.

It is also the case that the international statistics on these measures often have very low cutoffs for what it means ‘to have access’; this is, for example, the case for what it means to have access to energy.

10 years ago, Google counted there were 129,864,880 different books, and since then, the number has increased further by many thousands of new books every day.

This chart is from Jeremiah Dittmar and Skipper Seabold (2019) – New Media New Knowledge – How the printing press led to a transformation of European thought . I was unfortunately not able to find the raw data anywhere and could not redraw this chart; if someone knows where this (or comparable) data can be found, please let me know.

In the language of economists, the nominal value is measured in terms of money, whereas the real value is measured against goods or services. This means that the real income is the income adjusted for inflation (it is adjusted for the changes in prices of goods and services). Thereby, it allows comparisons that tell us the quantity and quality of the goods and services that people were able to purchase at different points in time.

I learned this way of thinking about it from Twitter user @Kirsten3531, who responded with this idea to a tweet of mine here https://twitter.com/Kirsten3531/status/1389553625308045317

We’ve discussed one such consideration that is crucial for comparability when we consider how to take into account the value of owner-occupied housing.

Whether economic growth translates into the reduction of poverty depends not only on the growth itself but also on how the distribution of income changes. The poverty metrics shown in this chart and in previous charts take both of these aspects – the average level of production/income and its distribution – into account.

Jutta Bolt and Jan Luiten van Zanden (2021) – The GDP data in the chart is taken from The Long View on Economic Growth: New Estimates of GDP, How Was Life? Volume II: New Perspectives on Well-being and Global Inequality since 1820 , OECD Publishing, Paris, https://doi.org/10.1787/3d96efc5-en .

The latest data point for the poverty data refers to 2018, while the latest data point for GDP per capita refers to 2016. In the chart, I have chosen the middle year (2017) as the reference year.

The ‘cost of basic needs’-approach was recommended by the ‘World Bank Commission on Global Poverty’, headed by Tony Atkinson, as a complementary method in measuring poverty.

The report for the ‘World Bank Commission on Global Poverty’ can be found here .

Tony Atkinson – and, after his death, his colleagues – turned this report into a book that was published as Anthony B. Atkinson (2019) – Measuring Poverty Around the World. You find more information on Atkinson’s website .

The CBN-approach Moatsos’ work is based on what was suggested by Allen in Robert Allen (2017) – Absolute poverty: When necessity displaces desire. In American Economic Review, Vol. 107/12, pp. 3690-3721, https://doi.org/10.1257/aer.20161080 .

Moatsos describes the methodology as follows: “In this approach, poverty lines are calculated for every year and country separately, rather than using a single global line. The second step is to gather the necessary data to operationalize this approach alongside imputation methods in cases where not all the necessary data are available. The third step is to devise a method for aggregating countries’ poverty estimates on a global scale to account for countries that lack some of the relevant data.” In his publication – linked above – you find much more detail on all of the shown poverty data. The speed at which extreme poverty declined increased over time, as the chart shows. Moatsos writes, “It took 136 years from 1820 for our global poverty rate to fall under 50%, then another 45 years to cut this rate in half again by 2001. In the early 21st century, global poverty reduction accelerated, and in 13 years, our global measure of extreme poverty was halved again by 2014.”

These are the same global poverty estimates – based on household surveys – we discussed above.

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Advances in artificial intelligence (AI) have the potential to affect growth, inequality, productivity, innovation, and employment. OpenAI’s ChatGPT, in particular, has greatly increased public awareness about the significance of AI and its implications for the future. What impact will the development of AI have on economic inequality, the composition of the workforce, and economic output as a whole? How can nations prepare for the micro and macroeconomic changes brought about by AI?

Measuring national and global economic activity allows us to understand how economies change in size and structure—how they grow and contract. In addition to Gross Domestic Product (GDP), government budgets, and the money supply, alternatives like the Human Development Index (HDI) and Gross National Income (GNI) are used to assess economic progress. What are the advantages of our current economic indices, including GDP, HDI, GNI, government budgets, and the money supply, and in what areas are they lacking? Which of these indices do you find most helpful, and how can we enhance or combine them to improve our understanding of economic measurement?

Proponents of income redistribution support the idea that redistribution policies will increase economic stability and give more opportunities to the less wealthy. Others, however, are more skeptical and believe it could have negative consequences for economic growth. Current methods of redistribution include taxation, welfare, public services, and other monetary policies. What strategies for income redistribution should the U.S. adopt from other countries? What economic impacts could a wealth tax or super millionaire tax have? What type of redistribution is most effective and feasible? What would be the impacts of the U.S. enacting universal basic income? Discuss the implications of any of these issues and feel free to expand on other areas of economic redistribution.

As the United States weighs the impacts of China’s rise to global prominence, economics and national security have become increasingly intertwined. As a result, the United States government has imposed both tariffs and investment restrictions on China to limit the nation’s access to both US markets and intellectual property (specifically in sensitive industries such as semiconductors). What are the economic implications of these policies for United States firms, consumers, and workers? Discuss the most important perspectives of the US-China trade war and provide suggestions on how both countries can manage the prospect of a changing economic order.

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In recent years and decades, many countries have seen fertility rates drop, potentially leading to falling populations. Currently, China has a fertility rate of 1.3, one of the lowest in the world. However, in 2021, China experienced GDP growth of 8% with output totaling $17.7 trillion. Will this lowered fertility rate (with potential to fall further) affect China’s economic growth and policy? How so? What, if anything, can the Chinese government do to limit the risk of falling fertility rates?

U.S. mortgage rates recently passed 7%, making the purchase of a new home increasingly unaffordable. Meanwhile, the United States has suffered from a chronic shortage of available housing for decades, particularly in urban areas, leading to what many scholars and advocates call an affordability crisis. Why is housing so unaffordable in the U.S.? What can (or should) be done by private actors, state and local governments, and the federal government to alleviate the affordability crisis?

It is often suggested that a tradeoff exists between economic growth and the health of the environment, especially now as the threat of climate change becomes more dire. What economic risks does a changing climate pose? Can economic growth be consistent with a healthy environment? What policies, either market-based or otherwise, should governments enact to protect the environment while posing the least danger to economic efficiency? 

Central banks such as the Federal Reserve in the U.S. and the Bank of England in the UK manage their nation’s macroeconomies with the goal of ensuring price stability and maximum employment. Globally, inflation rates are rising to levels not seen since the 1980s, particularly in the U.S. and European countries. To what extent should the monetary policies of central banks in various Western countries differ or resemble one another as a reaction to the specific causes of inflation facing their economies?

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• Political Economy
• Contributors

An overview of national economy

The future trajectory of Pakistan’s economy will depend on its ability to address deep-seated structural issues and harness emerging opportunities

akistan’s economic trajectory since its independence in 1947 has been influenced by a complex interplay of political, social and global dynamics. In 1947, the economy was predominantly agrarian. The government initially adopted import substitution industrialisation strategies to reduce reliance on foreign goods and foster domestic industries.

The 1950s and 1960s are frequently hailed as the “golden era” of economic growth as GDP grew at an average annual rate of approximately 6 percent. This period was characterised by state-led industrialisation, substantial public investments in large-scale industries and the development of infrastructure. However, the growth was uneven, leading to significant regional disparities and socio-economic inequalities.

The 1970s witnessed a paradigm shift in economic policy with the nationalisation of key industries under Zulfikar Ali Bhutto. This move was aimed at asserting state control over the economy and redistributing wealth. It inadvertently led to inefficiencies, bureaucratic expansion and a marked decline in industrial productivity.

The 1980s saw a policy reversal under Zia-ul Haq, who introduced deregulation, privatisation and economic liberalisation. Despite these reforms, the benefits were unevenly distributed and the economy remained susceptible to external shocks like fluctuations in global oil prices and geopolitical tensions.

The 1990s presented a tumultuous period for Pakistan’s economy. It was characterised by political instability, economic mismanagement and growing fiscal deficit. The early 2000s marked a resurgence of economic growth under Pervez Musharraf, driven by robust economic reforms, an influx of foreign investment and a favourable global economic environment. During this period, GDP growth rates peaked at over 7 percent, signaling a brief period of economic optimism. However, the momentum could not be sustained due to subsequent instability and the global financial crisis of 2008.

Current landscape

Currently, the economy is encumbered by a multitude of challenges, including structural deficiencies, external vulnerabilities and socio-political instability. The Covid-19 pandemic exacerbated these issues, leading to a contraction in GDP by 0.4 percent in FY2020. While there was a moderate recovery, with GDP growth rebounding to 5.6 percent in FY2021, the outlook remains precarious due to persistent structural weaknesses.

Economic performance

The recent years have been marked by volatility in GDP growth, reflecting the underlying structural challenges. The economy has struggled after the pandemic to regain consistent momentum. Growth prospects have been hampered by chronic energy shortages, inadequate infrastructure and a narrow tax base. The tax-to-GDP ratio of 9.5 percent is one of the lowest in the region.

Inflation and currency depreciation

Persistent inflationary pressures, driven by global commodity price shocks, supply chain disruptions and currency depreciation, plague the economy. The consumer price index (CPI) inflation surged to 24.5 percent in July 2022, exacerbating the cost of living crisis. Concurrently, the rupee experienced significant devaluation, losing over 30 percent of its value against the US Dollar in FY2022 alone, largely due to external debt obligations and political instability.

Fiscal and external deficits

Fueled by low tax revenues, high subsidies and substantial debt servicing costs, which account for over 40 percent of federal expenditures, Pakistan continues to be challenged by large fiscal deficits. The fiscal deficit stood at 7.9 percent of GDP in FY2022. The current account deficit remains a persistent challenge too. It widened to 4.7 percent of GDP in FY2022, reflecting the structural imbalance between imports and exports and the heavy reliance on external financing to bridge this gap.

Debt and IMF programmes

Pakistan’s growing dependence on external debt has necessitated repeated engagements with the International Monetary Fund. The most recent IMF Extended Fund Facility programme aims to stabilise the economy through fiscal consolidation, structural reforms and monetary tightening. However, the implementation of these reforms has been fraught with challenges, including political resistance and socio-economic implications.

Key sectors

The agriculture sector, which employs approximately 40 percent of the work force suffers from low productivity and inefficiencies. The industrial sector has potential but is constrained by infrastructural bottlenecks, energy shortages and a lack of technological innovation. The services sector, particularly IT and telecommunications, has shown promise. The IT export sector grew by 18.5 percent in FY2022. It requires more investment and supportive policy frameworks.

The future trajectory of Pakistan’s economy will depend on its ability to address deep-seated structural issues and harness emerging opportunities.

The dependency on indirect taxation must be systematically reduced, with a strategic pivot towards bolstering direct taxation mechanisms. This shift is essential for achieving a more equitable and efficient tax structure.  

Structural reforms

Achieving sustainable economic growth requires an array of structural reforms, with an emphasis on fiscal policy, energy sector efficiency and institutional governance. To fortify long-term macroeconomic stability, a multi-pronged strategy should be implemented, focusing on broadening the fiscal base, mitigating over-reliance on external financing and fostering a more conducive business environment through a dynamic, continuous economic development framework, rigorously monitored for efficacy.

The transition towards an enhanced sales tax system is paramount. This needs to be accompanied by expansion of the tax net to incorporate the substantial informal sector, which currently constitutes approximately 35 percent of the national economy. The formalisation is critical to augmenting fiscal revenues and reducing the fiscal deficit.

Also, the historic dependency on indirect taxation must be systematically reduced, with a strategic pivot towards bolstering direct taxation mechanisms. This shift is essential for achieving a more equitable and efficient tax structure. To stimulate economic activity and attract capital investment, the introduction of targeted tax holidays should be considered, providing incentives that not only catalyse investment but also facilitate job creation and economic inclusion for the populace. The focus on direct taxation, aligned with fiscal incentives is critical for generating sustainable economic momentum and fostering inclusive growth across Pakistan.

Investment in human capital

With 64 percent of the population under the age of 30, Pakistan is at the cusp of a demographic dividend. To leverage this potential, substantial investments in education, vocational training and healthcare are necessary to build a skilled work force capable of driving economic growth. Currently, Pakistan spends 2.4 percent of its GDP on education, far below the global average.

Regional integration

The China-Pakistan Economic Corridor offers substantial opportunities for infrastructure development and regional connectivity, with an estimated $62 billion in investments. However, maximising the potential of CPEC will require prudent management of associated debt, transparent governance and ensuring that the benefits are equitably distributed across the society.

Technological advancements and digital economy

The digital economy represents a promising avenue for growth, particularly in sectors like e-commerce, fin-tech and IT services. With a projected market size of $7 billion by 2025, government support for innovation, entrepreneurship and digital infrastructure will be crucial to unlocking this potential.

Climate change and sustainability

Pakistan is one of the countries most vulnerable to climate change. The estimated annual economic loss due to climate change disasters is 3 percent of its GDP. Integrating climate resilience into economic planning and pursuing sustainable development practices will be essential for long-term stability and prosperity.

Geopolitics

The geopolitical environment in South Asia will continue to influence Pakistan’s economic prospects. Relations with neighboring countries, particularly India and Afghanistan, as well as global powers, will play a crucial role in shaping trade, investment and security dynamics.

Pakistan’s economic narrative is complex. It has had periods of quick growth interspersed with significant challenges. The current economic landscape is fraught with vulnerabilities. With strategic reforms, investment in human capital and effective utilisation of regional opportunities, Pakistan can navigate its way toward sustainable growth and prosperity. Achieving this will require strong leadership, political stability, and an unwavering commitment to addressing the structural issues that have historically impeded economic progress.

The writer is Taxation- Pakistan & Middle East Cluster lead at Roche Pakistan Limited

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Best Compare and Contrast Essay Examples

National economics: united states and china.

1082 words | 4 page(s)

From the beginning of the foundation of the American constitution, the United States has embraced the democratic federal structure, allowing the people to voice their opinions and elect chosen representatives to reflect their beliefs on local, state, and national levels. The American health care system is outspoken when compared to the vast majority of industrialized nations, as there is no uniform structure and no universal coverage provided. Unlike many other countries, the education system in the United States requires private funding to progress into the university level whether the funding is a result of scholarships, out-of-pocket spending, or the most common option which includes student loans. Unlike the United States, China is a socialist republic that is operated by one unified group known as the Communist Party of China which utilizes Internal Reference to monitor and manage disagreements within the population. Close to 100 percent of the population holds basic health care coverage, yet public insurance typically covers less than half of all medical expenses.

Generally speaking, there are three specific classifications that are identified in financial systems. These include command, traditional, and market economies. Within the first, a national government will decide everything related to the means of production, including what goods and services will be made, in what way, and who the base of consumers will be (eNotes, 2009). This is the most uncommon, as it is often indicative of a totalitarian structure. Consequently, such economies are typically observed in communist countries including but not limited to China and North Korea. Conversely, in a market economy, the base of consumers are the determinants of means of production through their own individual decisions with respect to purchasing various goods and services (eNotes, 2009).

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Finally, a traditional economy follows generations of old, continuing to produce what has always been made in the exact same manner in which it has always been made (eNotes, 2009). Given the limitations of this particular structure, it is difficult to ascertain any particular nation whose economy fully embraces such a system. Therefore, the closest connection could be made to nations which share little connection to the economy on a global scale, such as Bhutan or Afghanistan. This paper will attempt to compare and contrast the economic structures of the two largest financial superpowers in the world (the United States and China) in addition to analyzing their own strengths and weaknesses.

From the beginning of the foundation of the American constitution, the United States has embraced the democratic federal structure, allowing the people to voice their opinions and elect chosen representatives to reflect their beliefs on local, state, and national levels (Bureau of Economic Analysis, 2018). Despite how well the system has prevented uprisings and civil entanglements over the past 2 centuries when compared to outside nations, the country has fallen privy to significant internal corruption due to its capitalistic structure; a system which allows private ownership and control over virtually all goods, services, and events that take place (Bureau of Economic Analysis, 2018). Those of sufficient monetary resources are often culprits of a behavior known as lobbying, the act of influencing decisions on the federal level with the use of massive funding; typically in the multi-billion dollar spectrum. The national flag symbolizes the successful union of the 50 states which represent the territory, and the 13 stripes are indicative of the original 13 colonies which collaborated in the declaration of independence from Great Britain during the Revolutionary War (Colonial Flag, n.d.). Colors have their own purpose in a similar way, as the red symbolizes valor and hardiness, the blue signifies justice and vigilance, and the white symbolizes purity (Colonial Flag, n.d.).

The American health care system is outspoken when compared to the vast majority of industrialized nations, as there is no uniform structure and no universal coverage provided. Instead of existing strictly as a single payer, multi payer, or national service, the American system is considered a hybrid of the three. More than 50 percent of all health care spending is a direct result of private funding (Bureau of Economic Analysis, 2018). Within this 50 percent, approximately 20 comes from private business and close to 30 from household income (Bureau of Economic Analysis, 2018). The rest of the spending, though much smaller, is a byproduct of local, state, and federal government spending.

Prior to the option of higher education services, American students are required to attend both primary and secondary school for a combined time period of 12 years which span grades 1 through 12. Near the age of 6, the average child living in the United States begins attendance of elementary school and soon attends middle school close to 6 years later. Upon completion of high school, the student is either granted a Diploma through conventional means or through the completion of examinations necessary to acquire General Education Development (GED) (Bureau of Economic Analysis, 2018). Unlike many other countries, the education system in the United States requires private funding to progress into the university level whether the funding is a result of scholarships, out-of-pocket spending, or the most common option which includes student loans (Bureau of Economic Analysis, 2018). Those who achieve a bachelor’s degree or higher are met with the lowest rates of unemployment and the highest rates of median annual income while those with an education below such threshold experiences higher unemployment and lower annual earnings probabilities.

Unlike the United States, China is a socialist republic that is operated by one unified group known as the Communist Party of China which utilizes Internal Reference to monitor and manage disagreements within the population (Thyne, n.d.). Post 1949, corruption in China is primarily attributed to the ruling party’s involution and its failure to adapt to changes instantiated by market liberalization reform (Thyne, n.d.). The red flag is symbolic of the people’s traditional color and the communist revolution which dominates the national infrastructure (World Atlas, n.d.). Of the 5 yellow stars, the largest represents the government while the four smaller ones are indicative of the population’s various social classes (World Atlas, n.d.). Close to 100 percent of the population holds basic health care coverage, yet public insurance typically covers less than half of all medical expenses. Despite this, the nation is beginning to implement requirements that state insurance will cover the vast majority of costs and plans to offer affordable care to all citizens by 2020 (Thyne, n.d.). Furthermore, the nation boasts the largest education system on the planet with more than 9 million students participating in the National Higher Education Entrance. Investment into this field also accounts for nearly 4 percent of the country’s GDP (Thyne, n.d.).

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• CBSE Notes For Class 10
• Class 10 Social Science Geography
• Chapter 7 Lifelines Of National Economy

CBSE Notes Class 10 Geography Chapter 7 - Lifelines of National Economy

The pace of development of a country depends upon the production of goods and services as well as their movement over space. Today, the world has been converted into a large village with the help of efficient and fast-moving transport. Today, India is well-linked with the rest of the world. In CBSE Notes Class 10 Geography Chapter 7 – Lifelines of National Economy, you will see how modern means of transport and communication serve as lifelines of our nation and its modern economy.

• Chapter 1 Resources and Development
• Chapter 2 Forest and Wildlife Resources
• Chapter 3 Water Resources
• Chapter 4 Agriculture
• Chapter 5 Minerals and Energy Resources
• Chapter 6 Manufacturing Industries

CBSE Notes Class 10 Geography Chapter 7 – Lifelines of National Economy

The movement of goods and services can be over three important domains of our earth, i.e., land, water and air. Based on these, transport can also be classified into land, water and air transport. Let’s discuss them in detail.

India has one of the largest road networks in the world, aggregating about 54.7 lakh km. The growing importance of road transport over rail transport is mentioned below:

• The construction cost of roads is much lower than that of railway lines.
• Roads can cover more geographically harder locations that cannot be done by the railways.
• Roads can negotiate higher gradients of slopes and can be easily built-in traverse mountains such as the Himalayas.
• Road transport is economical.
• It also provides door-to-door service.
• Road transport provides links between railway stations, air and seaports.

In India, roads are classified into the following six classes according to their capacity.

Golden Quadrilateral Super Highways

Golden Quadrilateral is a network of Highways connecting India’s four top metropolitan cities, namely Delhi, Kolkata, Chennai, and Mumbai. These highway projects are being implemented by the National Highway Authority of India (NHAI).

National Highways

The National Highways are a network of trunk roads that are laid and maintained by the Central Public Works Department (CPWD). The historical Sher-Shah Suri Marg is called National Highway No.1, between Delhi and Amritsar.

State Highways

Roads linking a state capital with different district headquarters are known as State Highways. These roads are constructed and maintained by the State Public Works Department (PWD).

District Roads

These roads connect the district headquarters with other places in the district. These roads are maintained by the Zila Parishad.

Other Roads

Rural roads, which link rural areas and villages with towns, are classified under this category. These roads received special impetus under the Pradhan Mantri Grameen Sadak Yojana.

Border Roads

Border Roads Organisation constructs and maintains roads in the bordering areas of the country. This organisation was established in 1960 for the development of roads of strategic importance in the northern and north-eastern border areas.

Roads can also be classified on the basis of the type of material used for their construction, such as:

• Metalled roads may be made of cement, concrete or even bitumen or coal. These are all-weather roads.
• Unmetalled roads go out of use in the rainy season.

Railways are the principal mode of transportation for carrying huge loads and bulky goods for long and short distances in India. Railways have become more important in India’s economy. However, rail transport suffers from certain problems as well, which are mentioned below:

• Construction of bridges is required across rivers’ wide beds for laying down the railway lines.
• In the hilly terrains of the peninsular region, railway tracks are laid through low hills, gaps or tunnels.
• The Himalayan mountainous regions are also unfavourable for the construction of railway lines due to the highest elevation points in the surface, sparse population and lack of economic opportunities.
• It is difficult to lay railway lines on sandy plains.

A pipeline network uses pipes, usually underground, to transport and distribute fluids. These are used to transport water, crude oil, petroleum products and natural gas, fertilizer factories and big thermal power plants. Solids can also be transported through a pipeline when converted into a slurry.

There are 3 important networks of pipeline transportation in the country.

• From oil field in upper Assam to Kanpur (Uttar Pradesh)
• From Salaya in Gujarat to Jalandhar in Punjab
• From Hazira in Gujarat to Jagdishpur in Uttar Pradesh

Waterways are the cheapest means of transport. They are most suitable for carrying heavy and bulky goods. It is a fuel-efficient and environment-friendly mode of transport.

The National Waterways in India are:

• N.W. No.1 – The Ganga River between Allahabad and Haldia (1620 km).
• N.W. No.2 – The Brahmaputra River between Sadiya and Dhubri (891 km).
• N.W. No.3 – The West-Coast Canal in Kerala (Kottapurma-Kollam, Udyogamandal and Champakkara canals-205 km).
• N.W. No.4 – Specified stretches of Godavari and Krishna rivers along with the Kakinada Puducherry stretch of canals (1078 km).
• N.W. No.5 – Specified stretches of river Brahmani along with Matai river, delta channels of Mahanadi and Brahmani rivers and East Coast Canal (588 km).

Inland waterways in India are Mandavi, Zuari and Cumberjua, Sunderbans, Barak and the backwaters of Kerala through which transportation takes place.

Major Sea Ports

India’s trade with foreign countries is carried from the ports. There are 2 major and 200 notified non-major (minor/intermediate) ports in India.

Here is the list of major ports in India:

• Kandla in Kachchh was the first port to be developed after independence. It is also known as the Deendayal Port.
• Mumbai is the biggest port with a spacious natural, and well-sheltered harbour.
• Marmagao Port (Goa) is the premier iron ore exporting port of India.
• Mangalore Port, located in Karnataka, caters to the export of iron ore.
• Kochchi is the extreme southwestern port located at the entrance of a lagoon.
• Tuticorin Port is situated in the extreme southeast.
• Chennai is one of the oldest artificial ports in India.
• Visakhapatnam is the deepest landlocked and well-protected port
• Paradwip Port, located in Odisha, specialises in the export of iron ore.
• Kolkata is an inland riverine port.
• Haldia port was developed as a subsidiary port in order to relieve growing pressure on the Kolkata port.

The airway is the fastest, most comfortable and most prestigious mode of transport. Air travel has made access easier to the terrain areas like high mountains, dreary deserts, dense forests and long oceans. Air transport was nationalised in 1953. Air India provides domestic and international air services.

Pawanhans Helicopters Ltd. provides helicopter services to Oil and Natural Gas Corporation in its off-shore operations in inaccessible areas and difficult terrains. But, air travel is not within the reach of the common people.

To know about the Smart Cities of India, watch the below video

Communication

The major means of communication in India are television, radio, press, films, etc.

The Indian postal network is the largest in the world. It handles parcels as well as personal written communications.

• First-class mail is airlifted between stations covering both land and air.
• Second-class mail includes book packets, registered newspapers and periodicals. They are carried by surface mail, covering land and water transport.

India has one of the largest telecom networks in Asia. Subscriber Trunk Dialling (STD) facilities all over India have been made possible by integrating the development of space technology with communication technology.

• Mass communication provides entertainment and creates awareness among people about various national programmes and policies. It includes radio, television, newspapers, magazines, books and films.
• India Radio Channel (Akashwani) broadcasts a variety of programmes in national, regional and local languages.
• Doordarshan, the national television channel, is one of the largest terrestrial networks in the world.
• India publishes a large number of newspapers in about 100 languages and dialects.

International Trade

The exchange of goods among people, states and countries is referred to as trade . Trade between two countries is called international trade . It is considered as the economic barometer for a country. Export and import are the components of the trade. The balance of trade of a country is the difference between its export and import.

• When the value of export exceeds the value of imports, it is called a favourable balance of trade .
• If the value of imports exceeds the value of exports, it is termed an unfavourable balance of trade .

The commodities exported from India to other countries include gems and jewellery, chemicals and related products, agriculture and allied products, etc.

The commodities imported to India include petroleum crude and products, gems and jewellery, chemicals and related products, base metals, electronic items, machinery, agriculture and allied products.

Tourism as a Trade

More than 15 million people are directly engaged in the tourism industry. Tourism in India:

• Promotes national integration
• Provides support to local handicrafts and cultural pursuits
• Helps in the development of international understanding of Indian culture and heritage. Foreign tourists visit India for heritage tourism, eco-tourism, adventure tourism, cultural tourism, medical tourism and business tourism.

We hope these  CBSE Class 10 Social Science Notes helped you in your studies. Keep learning and stay tuned for more updates on CBSE and NCERT. Download the BYJU’S App and subscribe to the YouTube channel to access interactive maths and science videos.

Frequently Asked Questions on CBSE Class 10 Geography Notes Chapter 7 Lifelines of Natural Economy

What is the meaning of ‘economy’.

An economy is a large set of interrelated production and consumption activities that aid in determining how scarce resources are allocated.

When was the Indian postal service started?

Warren Hastings had taken the initiative under the East India Company to start the Postal Service in the country in 1766.

What is the meaning of ‘International trade’?

International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services.

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