Sustained growth refers to a pattern of behavior in economic growth. Its main characteristic is that, in a scenario of sustained growth, growth shows a constant growth trend in the long term and, therefore, not very volatile.
Sustained growth is the name given to a pattern of economic growth in an economy. This refers to growth that is very stable. That is, persistent in the long term, and where the growth rate shows little volatility. In this sense, a constant growth in the long term, and that undergoes few variations over time.
Origin of the concept of sustained growth
We must know that we are talking about a relatively new concept. Well, it was not until the 19th century that it was discovered that the level of GDP per capita, as well as its growth, over time, could improve the standard of living of a population in a period of approximately one or two generations.
In other words, a small variation in growth today, in the long term, has a very large impact on the per capita income level of the population.
Thus, we must know that we are talking about exponential growth. Therefore, the importance of sustained growth is constant development and continuous improvement of the level of well-being. A situation that, in the same way but in reverse, relates the theory of stagnation. A theory that, in the same way that sustained growth and the rule of 70 do with growth, highlights stagnation, as a result of a very notable slowdown in the present.
Rule or law of 70
As with compound interest, the rule of 70 shows the time required for a variable to double in size.
In this sense, the rule of 70, on which the defenders are based, as well as sustained growth itself, shows that an economy is capable of doubling its size, if it manages to sustain a growth of 1% over 70 years .
By this same rule of three, if this economy, instead of growing at 1%, does so at 2%, this economy, in 35 years, will have doubled its growth, and with this the starting situation for the citizens themselves will have improved.
In the same way, an economy that presents a sustained growth of 2%, when 70 years have passed, this economy would have doubled in size twice. Whereas if you do it at 1% for 35 years, you will have grown by 50%.
To calculate it, just divide 70 by the registered annual growth. The result we obtain is the number of years it will take an economy to double its growth, if it grew at that growth rate constantly.
Therefore, this rule shows us that this sustained growth, due to its exponential nature, causes very high growth in the long term. However, as we will see now, many critics have questioned this growth, as well as the threat this sustained growth poses to what they call "sustainable growth."
Sustained growth and sustainable growth
Sustained growth, over time and the deterioration of the environment, has been harshly questioned by many economists. The continuing need to sustain growth for further development is likewise causing further deterioration of the environment. This is due to this greater exploitation of resources to, year-on-year, increase production and, with it, GDP growth.
For this reason, many economists have recommended that, despite this need to sustain growth, new indicators be developed. More complete and accurate indicators to measure well-being. The gross domestic product (GDP) has been highly questioned by many economists, who do not recommend the use of this indicator as an indicator of well-being. This is due to the fact that we are talking about an indicator that only grows when production increases.
And it is that, in a world that is moving towards greater reuse of resources, as well as a circular economy, an indicator that only grows when production increases may not accurately reflect reality.
That is why, although there is talk of the need to sustain growth, we must bear in mind the need to do so, but do it in a sustainable way. Many have been the economists who have said that, if this continues, the objectives of sustained growth, as well as those of sustainable, could come to clash. For this reason, it is necessary that, although it is necessary to grow at high rates to promote further development, that growth implements environmental criteria to ensure that development, while being sustained, is environmentally sustainable.