Home  Journals  Economic Analysis: Theory and Practice  29(380) - 2014 August

A comparative analysis of the quality of economic growth in developed and developing countries

Available online: 4 August 2014

Subject Heading: ANALYSIS OF ECONOMIC GROWTH

JEL Classification: 

Pages: 40-51

The article analyzes the quality of economic growth through intensification factors in generating contributions to the GDP. The selection criterion for extensive component of GDP is the deviation of the current costs of production of goods from the theoretical ones calculated on the basis of the data of technologically advanced States. The qualitative component of economic growth is determined on the residual principle, i.e. the difference between the actual GDP and the value of extensification components of growth. The author has conducted a comparative analysis based on the cost-output tables, developed in the WIOD, in developed and developing countries. The article contains three basic models of formation of proportions between extensive and intensive components of GDP: intensive, extensive and choice. The selection model is typical for the developing countries that implement the update process of production and technological base and development of new kinds of economic activities, providing the possibility of transition from an extensive variant of formation of economic growth. In developed countries, the main sources of generating quality of economic growth are the service sector and separate areas of the processing sector, and the extractive and processing sectors in the developing ones. Additionally, the authors introduce a hypothesis that in any economy there are sectors providing creation of extensive and intensive factors, and types of economic activity, which is a guideline in the framework of intersectoral cooperation, such as transport, trade and construction. Sector data "guides" proposed to allocate in a separate component of economic growth, i.e. a neutral one (neutral GDP). The share of the neutral component in GDP amounts to 20-30%. The calculations made for individual countries, have shown that the proportion of intensive component in the total GDP of the developed countries amounted to 0.63-0.97, and in the developing one less than 0.6. The further development of the method for assessing the quality of economic growth is through the selection in the intensive component of GDP, the volume of final consumption, formed on the basis of innovation products.

Keywords: economic growth, GDP, input-output table, intensification, extensification, quality

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