Read the case/source given and answer the question that follows.

If democracies are expected to produce good governments, then is it not fair to expect that they would also produce development? Evidence shows that, in practice, many democracies did not fulfil this expectation. If you consider all democracies and all dictatorships for the fifty years between 1950-2000, dictatorships have a slightly higher rate of economic growth. The inability of democracy to achieve higher economic development worries us. But this alone cannot be a reason to reject democracy. As you have already studied in economics, economic development depends on several factors: a country’s population size, global situation, cooperation from other countries, economic priorities adopted by the country, etc. However, the difference in the rates of economic development between less developed countries with dictatorships and democracies is negligible. Overall, one cannot say that democracy is a guarantee of economic development. But one can expect democracy not to lag behind dictatorships in this respect. When one finds such a significant difference in the rates of economic growth between countries under dictatorship and democracy, it is better to prefer democracy as it has several other positive outcomes.

Why is economic growth essential for a country?

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It increases state capacity and the supply of public goods

It benefits the marginal sections of the society

It helps in the reduction of economic disparities in a country

All of the above

answer is A.

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Detailed Solution

Economic growth is essential for a country as it increases state capacity and the supply of public goods.
Economic growth is defined as an increase in an economy's potential production level over a period of time. Monetary growth is critical for a country because it allows it to work on the nature of its existence. It also allows the country to accommodate any increases in the population without lowering the living standards. Human capital and economic development are intertwined. Human capital has an impact on economic growth and has the ability to generate an economy through knowledge and skills.

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