Normally, Real Income as used when looking at Economic Growth takes the GDP figures and then takes out the effect of inflation rates by forming an index thereby creating a reasonable set of statistics from which to draw conclusions.

Economic Growth is clearly seen as a desirable objective for all economies. It is obviously important for the UK to keep growing at a similar rate as othe

r rich economies globally, in order to remain competitive in terms of trade. One advantage of economic growth would be higher levels of employment or lower unemployment. An economy where demand is rising and businesses are growing is likely to have in it ample capacity to employ more and more people in its growing industry. If growth leads to higher employment and higher wages, then it follows that government tax revenues increase also. This might allow the government to replenish some of the Budget Deficit. Another advantage would be the improvement of living standards. Living standards tend to improve in a growing economy. Living Standards are generally measured in real GDP per capita, so if real GDP is increasing positively against the birth rate, it follows that at least on paper, living standards would improve. However, derived wealth such as that gotten through fast economic growth is not always evenly distributed, so an increase in living standards might be optimistic generalizing in a way.

Reasons for growth are complex and numerous. Basically, growth comes about as a result of the increased efficiency in the use of resources or factors of production. There are a few factors that can directly affect the levels of growth. Firstly, capital investment into a firm or an economy provides the opportunity for development, expansion, research, and possible higher levels of productivity. This ties in with the second factor called technological advances, which leads to the availability of better equipment, which in turn improves the manufacturing of goods or services, and also helps to create better ways of managing jobs and people. Investment can also be stretched to link with the third factor called education. Education and training work to make people more productive and effectively, act as investments into what is known as ‘Human Capital’. These three interlinked factors have significant effects on growth rates.

Economists such as Milton Friedman looked into government intervention in the circular flow of money and advised ‘prudent management’ of the monetary system. He then came up with a plan called The New Deal. This plan was originally formulated to get more young people between the ages of 18-25 into work the work force to help contribute to the economy. From a certain angle, every person who is out of work and claiming Unemployment Benefits/Job Seekers Allowance acts as a drain on the economy, hampering its growth and leeching on resources and money that could otherwise be used to expand and improve the country generally. New Deal is something of a cross between an employment agency with guaranteed placements and a training service. It quotes itself as being “created to help the unemployed get into work, by closing the gap between the skills employers want and the skills people can offer.” Once you sign up for New Deal, you are more or less immediately put into a position where you will be in a better position to give back to the economy. You more or less can’t get off that track until you are in real long-term employment.

New Deal is also a long-term strategy and I think it works in a very similar way to the key skills option, though not in such a focused way. It still works on developing the workforce, which should slowly and surely lead to growth in the GDP for the economy and has the added bonus of de-leeching the economy and getting unemployment down, getting more people putting something back in! I think it’s a good idea in particular to develop the

Some topics in this essay:
Vocational Qualifications, Policy Committees, Living Standards, Economic Growth, Seekers Allowance, Domestic Product, Milton Friedman, Voluntary Sector, David Blunkett, UK Government, economic growth, living standards, inflation rates, key skills, drain economy, gdp figures, circular flow, growing economy, gross domestic product, education training, real income, deal long-term strategy, getting people putting, effect inflation rates,