Question

Short answer

List 5 factor that contribute to the economic growth and explain how?

Answer 1

Five factors that contribute to economic growth are:

1. NATURAL RESOURCES : More natural resources like mineral deposits, or oil increases the country's Production Possibility Curve and may boost the economic growth. It is difficult to increase the supply of natural resources. So counties must take immense care to avoid depletion of natural resources. Other resources include land, water, forests, etc.

2. INFRASTRUCTURE OR PHYSICAL CAPITAL : Increased investment in physical capital lowers the costs of economic activities. Better machineries, equipments and factories are more productive than physical labor. Therefore, higher productivity increases output.

3. POPULATION OR LABOR : Growing population means an increase in the availability of employees or workers. More workers employed means more output.

4. HUMAN CAPITAL : Increased investment in human capital increases the quality of labor force. It results in an improvement in the abilities and skills. Skilled workers are far more productive and hence increases productivity and output.

5. TECHNOLOGY : Technology helps in increasing productivity and output with the same levels of inputs, thus accelerating development and growth.