Explanation of the break in trend, Microeconomics

Explanation of the Break in Trend:

An economy can grow in three different ways or all three ways may work simultaneously:  

1)  Horizontally, i.e., it may go on producing more of the same goods and services by either adding to the capacity of the same firms or by adding new firms. 

2)  Qualitatively, i.e., by improving the quality of goods and services it produces. 

3)  Vertically, i.e., by producing more of the same things by making its workers more productive. 

The break in trend in growth rate can be seen as vertical growth; the 1980s saw predominantly productivity - led growth. Labour productivity steadily increased. Changes in productivity could be caused either by an increase in workers' and managers' skills or better machines. Most of the productivity improvement could be attributed to the employment of better quality imported machines by the firms.   

Posted Date: 11/10/2012 3:01:08 AM | Location : United States







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