Economic Development In Countries

Economic Development In Countries

Introduction

Economic growth of a country is associated with the rising of income, savings, investments and consumption among others. It should however be noted that not all the developed countries have characteristics that are measured equally. For instance the rate of crime in rural areas in developed countries is low as compared to urban centers.

This paper aims at evaluating the economic growth of countries such as Bangladesh, Zimbabwe and Egypt.

Economic Development in Zimbabwe

The economic structure of Zimbabwe comprise of a great potential. Before independence, the country had placed a lot of emphasis on the mining industry hence being among the best in Africa. Mining of minerals such as nickel, gold, copper and ferrochromite led to the 4.9 billion dollars Gross Domestic Product. The rest of the country’s GDP is obtained from the agricultural sector which is produced at what is referred to as subsistence levels in the population. The country carries out trade with several partners with the partners not garnering more than fifteen percent of the export or import goods (Novelguide, p1).

First, we need to write the saving rate of the country which is showm nelow

2000 2001 2002 2003 2004

14 10 5 2 7

Using the Harrod-Domar model, the GDP rate of growth for the year 2000 -2005 having in mind that v=3, is presented below.

2000 2001 2002 2003 2004

4.67 3.33 1.67 0.67 2.33

When we compare this data with actual growth rates for those years, the following is obtained.

2000 2001 2002 2003 2004

Actual rates -6.1 -6.5 -12.1 -13.6 -8.2

Forecasted rates 4.67 3.33 1.67 0.67 2.33

The Harrod Domar model is used in poor countries such as Zimbabwe to help in determination of the necessary investment rate for the targeted rate of growth. It has however failed to characterize the economic growth in this country. This is as a result of endernic corruption and mismanagement which has led to the destruction of the country.

Economic Development in Bangladesh

Even after the country’s major setbacks during the time of liberation war as well as slowdown in the growth afterwards, the country’s economy has been able to accelerate since 1980 to date. The industries had an increase in growth level from 8.2% in the financial year 2011 to 9.5%. Power and construction industries had better performances as well as the manufacturing industries.

2000 2001 2002 2003 2004

23 23 23 23 24

(Index mundi. 2013),

Using the Harrod-Domar model, the GDP rate of growth for the year 2000 -2005 having in mind that v=3, is presented below.

2000 2001 2002 2003 2004

7.67 7.67 7.67 7.67 8

When we compare this data with actual growth rates for those years, the following is obtained.

2000 2001 2002 2003 2004

Actual rates 5.3 5.6 4.4 5.3 4.9

Forecasted rates 7.67 7.67 7.67 7.67 8

The Harod Domar Growth model has failed to determine the economic growth of the country. It suggests that the growth in economic rate is dependent on level of savings and investment productivity does not apply in this case because the income is low and therefore it is not easy to stimulate the LCD. On the other hand, the savings are not sufficient hence there will be a gap in between.

Economic Development in Egypt.

Egypt has a continued political transition since the 2011 revolution. This has led to a weak economic growth with a very high fiscal deficit as well as gross public debt both internal and external which has increased almost to 100% GDP towards the end of June this year. This low rate of growth is a great danger in the process of mounting social frustrations as the country is not able to offer the required jobs as well as opportunities. Most of the young people are unemployed. (World Bank, p1).

2000 2001 2002 2003 2004

20 18 18 19 21

Using the Harrod-Domar model, the GDP rate of growth for the year 2000 -2005 having in mind that v=3 (Index mundi. 2013), is presented below.

2000 2001 2002 2003 2004

6.67 6 6 6.33 7

When we compare this data with actual growth rates for those years, the following is obtained.

2000 2001 2002 2003 2004

Actual rates 5 2.5 1.7 3.1 4.5

Forecasted rates 6.67 6 6 6.33 7

The Harrod Domar model has again failed in determining the economic growth of the country.The country is not able to improve the living standards of the people due to social , economic and political institutions together with the perceptions of the present, past and future instead of working with the personal talents and efforts.

Conclusion

The paper has tackled the economic development in countries like Egypt, Bangladesh and Zimbabwe. It is evident that Zimbabwe is a country that is going down at a very fast rate yet there are very many resources. The Harrod Domar equation is not applicable in the three countries.

Work Cited.

Domar, D. (1946), “Capital Expansion, Rate of Growth and Employment,” Econometrica, Vol. 14.

Index mundi. (2013). “Historical data graphs per year”. Retrieved on 4th Oct 2013 from http://www.indexmundi.com/g/g.aspx?v=66&c=bg&l=enNovelguide. “ Economic Development in Zimbabwe”. Novel Guide.com.2013. Web Sept 2013

Trading economics. “ Zimbabwe GDP Annual Growth Rate”. 2013. Web Sept 2013.

“The World Bank Fact Book.2013”. Web http://data.worldbank.org/indicator