0.1 Economic development is about all of economics  (Page 2/14)

Throughout, we will be concerned about two main questions:

#1. How countries can achieve economic growth over long periods of time, especially economic growth that is as sustainable and supportive as possible of clean environments and the interests of future generations.

#2. The effects of economic growth on income distribution, health, longevity, role of women, population growth and poverty .

The record of the past century is clear regarding several matters:

• Countries that do not achieve sustained economic growth also do not do well in protecting air and water quality, or in reducing income inequality.
• The implications of the long run. Nobody, including economists, understands how to promote short and medium-term economic growth. The economic profession lacks this knowledge— growth is all about the long-term .
• Attaining high long-term rates of economic growth is difficult, and is rarer than commonly thought. Example: A commission headed by Nobel Laureate Economist Michael Spence found that in 2008, only 2% of countries have ever experienced long term growth (growth over 25 years) above 5% per capita (in real terms). However, about one quarter of all countries have had transitory episodes of growth in excess of 5%.

One should not be dismayed by these numbers. Due to compound interest, a 5% growth rate economy doubles in size every 15 years – less than a generation.

Good policies — fiscal, monetary, trade, exchange rate, education — have resulted in growth rates of 2-4% over very long periods in several countries, especially in East Asia.