To understand why countries grow, look at their firms

GateUser-9ad11037 · 2026-03-11T06:57:06+00:00

Economic growth significantly impacts living standards, as demonstrated by the divergent paths of South Korea and Ghana since 1960. A 1% growth rate barely doubles an economy, while 7% can expand it 30-fold, affecting health, education, and quality of life.

GateUser-9ad11037

2026-03-11 06:57:06

Abstract generation in progress

TO GRASP THE stakes of economic growth, start with the arithmetic of compounding. Over two generations an economy growing at about 1% a year will not even double in size; one growing at 7% will expand roughly 30-fold. South Korea and Ghana show what such differences can mean. In 1960 the two had similar incomes. Today South Koreans browse Gangnam’s luxury boutiques and sip lattes in Garosu-gil’s trendy cafés, while the typical Ghanaian still lives on less than $4 a day. Even a few percentage points make an enormous difference over time: fewer children die, people live longer, education spreads and daily life becomes more comfortable. Little wonder that Robert Lucas, a Nobel-prizewinning economist, remarked that once you start thinking about economic growth it is hard to think about anything else.

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

1 Likes