Economic growth

What economic growth really means? Our age is an age of economic growth combined with rapid population growth. Two dynamics have meant a massive expansion of economic activity; of total output produced on the planet each year and of course a massive increase in humanity’s impact on the planet.

We are also seeing improved health. Around 1950, for every 1,000 children who were born, an estimated 134 out of the 1,000 would not survive till their first birthday. 134 have come down to 28 today. However, it is still sad that 28 children still don’t make it to their first birthday, dying of malaria or pneumonia, or other preventable diseases.

With more children surviving and with health improving at older ages as well, the good news is that our life expectancy is also rising. In the middle of the last century the period 1950 to 1955, the average life expectancy for people on the planet was around 47 years.

As of today, the estimated life expectancy at birth is more than 70 years. And in the high-income countries around 80 years. Economic development can improve lives. We also need to ensure that the economic growth is inclusive and that it’s not leaving millions and millions of people behind. Progress itself should not cut our natural life support systems of biodiversity, food production, and safe climate-productive oceans.

The challenge is to ensure a holistic approach to ensuring that economic growth and material improvement are socially inclusive and environmentally sustainable.

However, there has been no example of economic growth more remarkable than China. It is the world’s most populous country. Anything major that happens in China is earth-shaking. China has been among the fastest-growing economies in world history. China was averaging roughly 10% per year of economic growth. It could be the rule of 70. If we take the number 70 and divide it by the growth rate in this case 10, 70 divided by 10 is 7. It means China has been doubling its national income every seven years.

For instance, Shenzhen was a small village in 1980 mainly rural with 30,000 people. Shenzhen today has 17mn people. Shenzhen has become a modern metropolis and a manufacturing hub for the world. Not only did populations rise, did incomes per person soar, but also, how people live clearly and fundamentally changed. From rural agricultural livelihoods to modern urban manufacturing and services in a matter of three decades.

While we may not experience a Shenzhen-like change. However, the basic pattern of economic growth a transition from poor, small-holder farming to modern manufacturing especially the modern service economy is part of the normal pathway of economic growth.

For thousands of years, the population was under 1bn. Then from 1830 to 1930 just in one century, the second billion was added. But then the numbers started to soar because from 1930 to 1960, just 30 years, a third billion was added. We are on track to reach 8bn soon, and 9bn sometime in the 2040s. This population change is astounding.

In Bhutan, 29 out of 1,000 babies die before their 5th birthday as of 2019. The poverty rate slightly increased to 11.2 percent in 2020 from 10.7 percent in 2019. Bhutan should look beyond hydropower and tourism.

Policies should support economic diversification!