Economic growth
He knows Economic growth It is an increase in the rate of production of economic goods and services during a certain period of time compared to another period of time, and many factors contribute to enhancing economic growth such as; capital goods, labor, and technology. What are the most important theories that have studied economic growth? This is what we will learn about below.[١]
Theories of economic growth
Mercantilism
It is one of the early concepts in the field of Economic growth that arose in the fifteenth century, where it was introduced The French economist Antoine de Montchristine came into scientific circulation, and the proponents of this doctrine adopted the belief that wealth and the total goods produced are the resources that contribute to raising the trade surplus and are the main source of growth, while the early scholars believed that precious metals and coins are the main source of growth, and on the other hand this doctrine encourages the development of manufacturing and local markets.[٢]
Classical theory
Adam Smith, David Ricardo, and Thomas Malthus are all known as The most famous representatives of the classical theory of growth The economist, and the movie “The Revolution of Nations” is Adam Smith’s first step in applying and adopting the classical theory. Representatives of this theory believe that gold is not the basis of the wealth of nations, but rather trade. They also believe that economic markets have the ability to organize themselves when they are free from coercion, as Adam Smith believes that there is a hidden force (figuratively) within the markets that organizes them and directs them towards natural balance.[٢]
Schumpeter's early development theory
Joseph Alois Schumpeter's work was first published in 1911 under the title "The Theory of Economic Development". Schumpeter defined the term innovation in economics, but in a different way in which he referred to the importance of the entrepreneur in terms of economic growth. He also believed that the factor Main Entrepreneurship is innovation that drives development, and it is also known that the driving force of development is an innovative and creative businessman who has the ability to take initiative.[٢]
Keynesian theory
This theory, which is an independent type of economics, believes that government intervention to regulate the economy is what can determine stability in the economy and achieve its growth. The British economist John Maynard Keynes is the one who achieved a revolution in economic thinking, especially during the economic depression of the 1930s. According to Keynes, economic work included three principles, which are:[٣][٢]
- Economic demand (economic growth) can be affected by many economic decisions.
- Prices respond slowly to changes, especially labor wages.
- Output and workers are mainly affected by changes in aggregate demand, not prices.
Other theories that study economic growth
Below is an explanation of other theories that are concerned with and interested in studying economic growth:[٢]
- Neoclassical Growth Theory and Robert Solow's External Theory: It emerged in the 1950s and 1960s, and studies economic growth influenced by technology and improved productivity.
- Endogenous economic growth theory: This theory emerged in the 1980s and 1990s, and believes that progress is an internal growth factor for the economy.
the reviewer
- ↑ “economicgrowth”, investopedia, Retrieved 5/2/2022. Edited.
- ^ A for T Th G First SHARIPOV, CONTEMPORARY ECONOMIC GROWTH MODELS AND THEORIES: A LITERATURE REVIEW, Page 2-3. Edited.
- ↑ “What is Keynesian economics?”, International Monetary Fund, Retrieved 5/2/2022. Edited.
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