Question

How ANNUAL GROWTH rates of two countries of same level depends on :-

►Technology-

►Population

►Development

►Economic Growth

►Governance

EXPLAIN ALL THESE FACTORS MENTIONED ABOVE . EXPLAIN THESE POINTS IN MINIMUM 3-4 LINES.

Answer 1

Regarding technology, any country will superior technological advancements will grow faster. A good and sound technological development, will increase productivity and reduce cost of production. It will cause, SRAS and LRAS both to shift to the right. As a result, growth becomes faster for the country with such a technological development.

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Regarding population, any country with larger population is going to use more resources on consumption goods and less resource on capital goods. It will make economic growth to be slow. But, for a country with smaller population, more of the resources are used to produce capital goods that facilitate the economic growth. Hence, economic growth will be faster for country of smaller population.

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Regarding development, a country will higher level of development, builds suitable infrastructure for growth. It facilities economic growth in the country. But, any country that has poor development in the domestic economy, will have many issues in attracting investments. As a result, economic growth slows down for this type of country.

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Economic growth is the also a precursor or catalyst of economic growth of the future. A country will sound economic growth and domestic demand, will achieve higher level of economic growth with sustainability. But, a country though at a same level, but poor economic growth will become laggard and will not grow properly in the future.

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A good governance is the key of sound economic policies with a vision for today as well as for the future. So, a country will proper governance and its structure, achieves higher growth rate. But, a country will poor governance, makes poor policy planning and makes less use of resources. Hence, economic growth gets stagnant over a period of time in the country, where governance is poor. So, a good governance is very important to achieve higher growth rate in the country.