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July 4, 2002  Each year about this time the leaders from eight of the world’s largest economies gather together to discuss the world’s most pressing economic issues.  This year’s G8 Economic Summit was held last week in Kananaskis, Canada.

The global economy is in the process of recovering from an economic slowdown in 2001.  The G8 economies (Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States) account for nearly 50% of the global economy’s GDP and trade.  The macroeconomic performance of these countries significantly affects virtually all of the other countries in the world.  If the G8 economies were to grow faster this year, then it’s likely that the rest of the world’s economies would also grow faster.

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One of the best and most succinct discussions of economic growth can be found in Chapter 17 of McGraw-Hill’s 15th edition of the introductory textbook entitled “Economics” by co-authors Campbell R.McConnell and Stanley L. Brue.  The text explains that economic growth means greater material abundance and higher living standards which are desired by most people.  Each generation of parents hopes that their children will be better off than they were and for good reasons.  Alice Rivlin of the Brookings Institution is quoted in the chapter to elaborate in specifics why economic growth is so important.  According to Rivlin, rising output and incomes allow people to buy “more education, recreation, and travel, more medical care, closer communications, more skilled personal and professional services, and better-designed as well as more numerous products.  It also means more art, music, and poetry, theater, and drama.  It can even mean more time and resources devoted to spiritual growth and human development.”  The text goes on to state: “Growth also enables society to improve the nation’s infrastructure, enhance the care of the sick and elderly, provide greater access for the disabled, and provide more police and fire protection.  Economic growth may be the only way to reduce poverty, since there is little political support for greater redistribution of income.  The way to improve the economic position of the poor is to increase household incomes through higher productivity and economic growth.”