China's Domestic Consumption and Economic Growth

While efficiency and technological improvements in labor and capital contribute greatly to an economy, one very important factor that instigates economic development is high domestic consumption. The introduction of the railroad, as noted in class, was a significant event in our country's economic history. High domestic demand for goods allowed for producers to expand beyond their local markets, and transportation improvements such as the railroad helped satisfy consumer demands. These transportation improvements also led to other kinds of economic development and growth. As noted in this article, domestic demand for goods in China is relatively low compared to in countries such as the United States. While China does have comparable technology and resources as developed nations, it is not yet categorized as a "developed" country. This could be related to the country's low rate of domestic consumption, and how that kind of behavior effects economic growth.