The standard of living is the level of material goods, wealth, necessities, and comfort available to a particular socioeconomic group, mostly a nation. It includes factors like poverty rate, income, employment availability and quality, Gross Domestic Product, political and economic stability, national economic growth, house affordability, and quality, the expectancy of life, quality of education, and whether available (International Labour Organization. “Global Employment Trends for Youth 2013.”). Living standards are linked to quality of life.
It is measured by the Gross Domestic Product (GDP) per capita, which is the division of a country’s gross domestic product by its entire population. GDP is the sum of output services and goods generated in one year by everybody in that country. In this paper, I will describe the levels of economic growth of various countries regarding their living standards and policies responsible for that growth (The World Bank. “World DataBank).
Classification of Countries According to their Level of Economic Growth and Living Standards.
GDP per capita is the key element in quantifying the living standards of different countries. It enables us to classify nations into low-, middle-, or high-income groups (Nobelprize.org. “The Prize in Economics 1987).
Low-Income Nations
Also called economically challenged countries. They are the ones with $1,025 GDP per capita in a year. These earn 1% of the world’s total income, but they represent only 18.5% of the population globally (Nobelprize.org. “The Prize in Economics 1987). Examples include: Zimbabwe, Eritrea, Burundi, Liberia, Niger, Madagascar, Malawi, and Afghanistan
Middle-Income Nations
Sometimes called East Asian Tigers. The GDP per capita of these countries ranges between $1,025 to $12,475 per year. Middle-income countries earn 32% of the income, representing 69.5% of the global population. They are from Thailand. South Korea, Malaysia, China, Singapore and Indonesia (Redvers 2012)
High-Income Nations
Their per capita GDP per year, in most cases, is above $12,475. They get 68% of the world’s income but represent only 12% of the population globally (Smith &Todaro,2011). They include the following; Europe, the United States, and Japan
Problems Relating to the Policies of Growth Associated with High-Income Country, Focus of Major Public Policies Responsible for Addressing the Problems:
High-Income Country Growth Policies
For these countries, the challenges to the growth of their economy are the attempt to continually push for a greater number of educated individuals who can design, invest and apply the new technologies, thus the ambition of their public policy that is growth-oriented is to move their supply aggregate curves towards the right (International Monetary & Fund Financial Surveys, 2013). The major public policies aimed at meeting this goal are fiscal policies concentrated on investment, amongst investing in physical equipment and plant, human capital, and technology. They consequently know that growing economically works best in a market-oriented and stable climate. Because of this, they apply the money policy to keep inflation stable and low, minimizing the risk of fluctuations in exchange rates and giving courage to international and domestic competition (International Monetary & Fund Financial Surveys, 2013).
Middle-Income Countries Growth Policies
Physical and human capital, technology, and the inventiveness of market-based economic settings demonstrated a capable growth stimulant (The World Bank. “World DataBank). These countries face problems like the legacy of government economic control, which can be removed only slowly. In most of them, the financial and banking sectors are regulated heavily. The government has also selected some industries to get low-interest loans and government subsidies. The economies have realized that increasing market-oriented motives for workers and firms add value to faster growth (International Labour Organization. “Global Employment Trends for Youth 2013).
Growth Policies for Low-Income Countries
Most of these economies don’t have the legal, economic stability, and market-orientated organizations necessary for a productive ground for their growth in the domestic economy and attraction of foreign investment. World Bank is set to fight poverty and increase levels of income of this countries by 2030, however political instability hinders this achievement. The low-income economies are at a downside since any income received is immediately spent on basic needs like food (Nobelprize.org. “The Prize in Economics 1987). Failure to save leads to a lack of capital accumulation and funds that can be loaned for human and physical capital investment.
Conclusion
In conclusion, the goal of improving a nation is not basically increasing the Gross Domestic Product (GDP) but trying to increase the Gross Domestic Product per capita, which in turn increases people’s living standards (Smith & Todero, 2011). Economic growth can be attained at the national level through scheming policies that deepen capital, increase worker productivity, and lead to technology increment.
References
International Labour Organization. “Global Employment Trends for Youth 2013.” http://www.ilo.org/global/research/global-reports/global-employment-trends/youth/2013/lang–en/index.htm
International Monetary Fund. “World Economic and Financial Surveys: World Economic Outlook—Transitions and Tensions.” Last modified October 2013. http://www.imf.org/external/pubs/ft/weo/2013/02/pdf/text.pdf.
Nobelprize.org. “The Prize in Economics 1987 – Press Release.” Nobel Media AB 2013. Last modified October 21, 1987. http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1987/press.html.
Redvers, Louise. BBC News Business. “Youth unemployment: The big question and South Africa.” Last modified October 31, 2012. http://www.bbc.co.uk/news/business-20125053.
The World Bank. “The Complete World Development Report Online.” http://www.wdronline.worldbank.org/.
The World Bank. “World DataBank.” http://databank.worldbank.org/data/home.aspx.
Todaro, Michael P., and Stephen C Smith. Economic Development (11thEdition). Boston, MA: Addison-Wesley: Pearson, 2011, chap. 1–2.
