Question

For an economy to grow it must increase labor, capital and/or productivity. While there are diminishing returns to capital and labor, growth from productivity is unlimited.

Governments have a role in providing the framework for sound economic growth. This includes having sound fiscal and monetary policy. Other factors that encourage GDP growth are reasonable taxes and regulation, low corruption, and openness to trade and foreign direct investment.

For this assignment you will write a paper analyzing the growth of a specific country. Identify one country that has demonstrated high GDP growth rates (over any time period) and answer the following:

1. Describe the growth rates and the time period of the growth
2. Explain the reason for the growth addressing:
   1. Growth of capital, labor and productivity in the economy
   2. Role of fiscal policy in GDP growth (taxes, spending and debt)
   3. Role of monetary policy in GDP growth (money supply, interest rates and inflation)
   4. Role of foreign direct investment and trade in GDP growth.

Answer 1

Please find below answers for the questions.

A. Growth of capital, labor and productivity in the economy?

Answer>  The high economic growth, it is based on core sector of IIP and WPI to improve an productivity function, which is the process of turning economic inputs like labor, machinery, and raw materials into outputs like goods and services used by consumers. A microeconomic production function describes the inputs and outputs of a firm, or perhaps an industry manufacturing sector and service sector will improve thus it return high GDP Growth.

B.Role of fiscal policy in GDP growth (taxes, spending and debt)

Answers>Fiscal policy means the use of taxation and public expenditure by the government for stabilization or growth of the economy. By fiscal policy we refer to government actions affecting its receipts and expenditures which ordinarily as measured by the government’s receipts, its surplus or deficit.” The government may change undesirable variations in private consumption and investment by compensatory variations of public expenditures and taxes.
HIGH Growth GDP of country is required to balanced between welfare and capital investment. Every country is required high infra and labor skill to industry to met.

C.Role of monetary policy in GDP growth (money supply, interest rates and inflation)

Answer>The Major role of Central banks have three monetary policy objectives. 1 The most import is to manage inflation. The secondary objective is to reduce unemployment, but only after controlling inflation. The third objective is to promote moderate long-term interest rates.

D.Role of foreign direct investment and trade in GDP growth

Answer>The most important factors in the economic growth processing of any country are the commercial transactions and foreign direct investments (FDI). The market opening in economic growth is due mostly to the accumulation of natural capital and the technology transfer. The exporters would try through competition to enter foreign markets by using innovation and production technology. The FDIs increase the exporting capability in the host country and lead to profit increase at a foreign exchange mostly in developing countries. They also increase the provision of funds for domestic investments, encourage the creation of new jobs, reinforce the technology transfer, and increase in total economic growth