Question

3. What are the three main sources for economic growth in any economy? Describe each source.

4. How can increased investment help a country achieve increased economic growth? What are the costs involved?

Answer 1

By the term economic growth we mean the increase in the production of goods and services in an economy. In other words, it is the increase in the market value of goods and services produced in the country over a time.

The sources of economic growth may different in a developed and a developing country. Basically, the three main sources of economic growth are:Technology, human resources and natural resources.It depends upon how a country utilizes its these three resources. Let's have a look into each of these one by one.

1. Technology: Technological advancement and economic growth are inter related. In an era of fast food and fast life, the most modern technology is the most important factor to keep in pace with the competition. In order to compete with the world market, one must use this technological resources effectively and timely. It should have the creativity and innovative ideas to avail this in a profitable manner and too in the  long run. To reach up to this level of development, an economy should have a wealthy human resources. So let's move on to the second factor, ie, human resources.

2. Human resources: People are the real wealth of a nation. No development is possible without this factor. Sometimes, human resources is refered as human capital. It is the ability, skill and technological know how among the population of a country. A proper utilization or both quantitative and  qualitative use and development of human resources will definitely boost up the economic growth. So investment on human development by giving proper education to its citizens calls for a rapid economic growth.

3.Natural Resources: In fact, natural resources are the free gifts of nature.They include water, sunlight, mines forests etc As pointed out by Lewis, “A country which is considered to be poor in resources today may be considered very rich in resources at some later time, not merely because unknown resources are discovered, but equally because new uses are discovered for the known resources.”

Investment means expenditure on capital spending. It may include buying new machinery, building up of new factories etc. So Without investment economy cannot progress. Wise investment in a proper way is the rode to rapid economic development.