Introduction
Economic growth rates differ from country to country. They are one of the development indicators. There can be short or long term economic growth rates observed. In the paper the economic growth rates in the last two decades of the United States, Japan, Ethiopia and China will be examined. Their differences will be presented along with the important governmental policy for countries which has led to the specific growth rates.
Economic growth is shown in the terms of gross domestic product – GDP, or related indicators derived from the GDP such as, gross national income – GNI, gross national product – GNP. There are different approaches of measuring GDP, but the paper will use the definition and measures from the World Bank. Based on the World Bank GDP growth has been presented in the % and is the “sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of products.” (World Bank, n. d.).
Comparison of growth rates
Based World Bank on the twenty years annual GDP growth from 1993 till 2014, since the data was not available for the year 2015, calculated average for GDP growth for last available 20 years was for the United States 2.57%, for the Japan 0.815%, China 9.97% and for Ethiopia 8.1% (World Bank, n. d.). From the data it is seen that the average growth rate expressed in annual GDP growth differs. The Biggest GDP growth rate was seen in China and Ethiopia and the minor growth compared to previous two countries in Japan and United States. The differences among countries are even bigger in looking short term growth rates.
The reasons for the long term GDP growth rate can be seen because of the increased capital and investments, increase in working populations and increase in labor productivity, technological improvements or other factors. It must be noted that developing countries usually have a higher GDP growth rate as developed countries, but they are based on the past events and economics history. The differences that have led to the different growth rates are in their development phase, different international cooperation and trade and foreign and domestic policies. There are, however, various complex factors involved in the growth and every country has its own specifics, where governmental policies can also play an important role in the GDP growth (Sabilon, 2008).
Countries policies
First successful economic policies of Japan were regarding the manufacturing. After that the country saw stagnation of the national economy. Japan has in 2013 introduced the policy named “Abenomics” with which they are trying to diminish the impacts of the global crisis, earthquake and tsunami economic consequences. With the policy they are trying to improve the fiscal and monetary policy, the highest governmental debt among developed countries and stagnating of the economy with decreasing of GDP (The Economist, 2015).
United States that have been really affected by the global economic crisis and have implemented by Barack Obama administration the economic policy of increased coordination, in the trade and finance among major state actors in the state. The second most important governmental, economic policies are trade policies with the expansion of trade and national economy since 1950 year forward and in recent times implementing of Trade Promotion Authority and negotiating about Asia-centered Trans Pacific Partnership and Transatlantic Trade and Investment Partnership with European Union (Council on Foreign Relations, 2015).
Government of Ethiopia made the progress with introducing economic policies in the year 1992 when it started to cooperate with the World Bank and International Monetary Fund in order to make structural adjustments. With it the liberalization and privatization followed. The government implemented the Industry Development Strategy with which the most important sector in the country is being promoted – agriculture by focusing on the export (Ethiopian Governmental Portal, n. d.).
China biggest transforms and the policy was its market reforms in 1978 were from central planed it went to the market based economy, which resulted in the rapid growth of GDP. After the privatization in the 1990 the most important governmental policies reduced the tariffs, regulations and trade barriers which resulted in the increased trade and higher GDP. After that, various populist polices followed, which among other factors decreased the growth of the annual GDP (Ding & Knight, 2012).
Conclusion
All four examined countries had a different growth rate of GDP. The GDP is hard to compare since every country has a different history and characteristics and does not necessary mean that higher GDP means better development. The developing countries, China and Ethiopia have the highest growth rate and Japan and United States as developed country lower GDP growth rate. The reasons are different and complex and differ from case to case basis. The governments of the examined countries have introduced different economic policies that helped to achieve increased growth through the past years. Countries implemented different tax, fiscal, trade and monetary policies.
Work cited
Council on Foreign Relations. 2015. CFR Backgrounders. Retrieved http://www.cfr.org/trade/future-us-trade-policy/p36422
Ding, Sai, Knight, John. 2012. China’s Remarkable Economic Growth. United Kingdom: Oxford University Press.
Ethiopian Governmental Portal. N. d. Policies and Strategies. Retrieved http://www.ethiopia.gov.et/web/pages/policies-and-strategies1
Sabilon, Carlos. 2008. On the Causes of Economic Growth: the Lessons of History. New York: Algora Publishing.
The Economist. End of the Affair. Retrieved http://www.economist.com/news/asia/21648020- government-shinzo-abe-increasingly-odds-central-bank-end-affair
World Bank. N. d. GDP. Retrieved http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG
You can also include the table:
GDP growth rates from 1993 to 2014
Source: World bank, n. d.
