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, 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 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 am going to describe the levels of economic growth of various countries regarding its 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 capital is the key element in quantifying 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).
Also called economically challenged countries. Are the ones with $1,025 GDP per capita in a year. These earn 1% of world income’s total but they represent only 18.5% of population globally (Nobelprize.org. “The Prize in Economics 1987). Examples include: Zimbabwe, Eritrea, Burundi, Liberia, Niger, Madagascar, Malawi, and Afghanistan
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 although they just represent 69.5% of total global population. They are: Thailand. South Korea, Malaysia, China, Singapore and Indonesia (Redvers 2012)
High Income Nations
Their per capita GDP per year in most cases above $12,475. They get 68% of world’s income but represents only 12% of population globally (Smith &Todaro,2011). They include the following; Europe, 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 growth of their economy is 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 in technology. They consequently know that to grow economically works best in a climate that is market oriented economically and is stable. Because of this, they apply the policy of money in keeping inflation stable and low, in minimizing the risk of fluctuations in exchange rates, and giving courage to international and domestic competitions (International Monetary & Fund Financial Surveys, 2013).
Middle Income Countries Growth Policies
Physical and human capital, technology, together with inventiveness of market based economic setting, demonstrated a capable growth stimulant (The World Bank. “World DataBank). These countries face problems like government legacy of economic control that can be removed only at a slow pace. In most of them, the financial and banking sectors are regulated heavily. The government has also selected some industries to get loans of low interest and government subsidy. The economies have realized that an increment in market oriented motives for workers and firms adds 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 legal, economic stability and market orientated organizations necessary for a productive ground for their growth in 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 lack of accumulation of capital and funds that can be loaned for investment in human and physical capital.
In conclusion, the goal towards improving a nation is not basically increasing the Gross Domestic Product (GDP) but to try and increase the Gross Domestic Product per capita increasing the entire living standards of people (smith& Todero, 2011). As seen from economic growth, it can be attained at the level of the nation through scheming policies which deepen capital, increase productivity of workers and lead to technology increment.