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Political Economy

Economic Growth

Economic Problems

Economic Growth, page 2

page 1 of 2

Perhaps the most obvious economic goal for a nation-state is economic growth, or an increase in the total value of the country’s economy. Nation-states strive for economic growth to increase the standard of living for their citizens and to gain more power in the world market. When growth is slow or when the economy actually shrinks in size, leaders often face strong criticism and greater opposition.

Gross Domestic Product

Gross domestic product (GDP) is the measure of the total amount of all economic transactions within a state. An increase in GDP leads to economic growth. Because economic growth means that the country as a whole is richer, it makes sense that a government will seek to increase the nation’s GDP.

GDP is frequently measured per capita, as the amount of GDP for each person. To calculate per capita GDP, divide the total GDP by the number of people in the country. Countries have widely different population sizes, so comparing their GDPs is not all that helpful. Economists and political scientists do, however, compare per capita GDP to get an idea of the relative wealth or poverty among different countries.

Per capita GDP varies widely around the world. The following table shows some examples of global GDP. As the table illustrates, in industrialized countries, per capita GDP can be more than $30,000 a year, but in very poor countries, per capita GDP is sometimes less than $1,000.

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