Question

You are an economic consultant and have been contacted by an official from a developing country. She tells you that her country’s economy is currently growing at 2% per year. She asks you how long it will take for her country’s economy to double in size; you tell her it will take 35 years. She then asks you what the government can do to shorten the time necessary to double the size of the country’s economy. What should you tell her? Use the factors that can lead to economic growth to explain your answer.

Answer 1

There are various ways through which the economic growth can be increased and the economy can move faster. i)One of the important policy government can take is technological innovation and improvement. If govt invest more to improve the technological factors the there can be more production and employment. This will lead to grow the economy more faster. ii) Another policy government can take to initiate the skill development of the employees in different sectors of the economy. Due to skill development the workers in the economy will perform better and as a result the economy will grow more faster. iii) Another policy government can take is the promote employment and make the demand of different products. Through employment generation and creating monetary base to all the people will make the economy more better and better. As a result the economy can grow faster. iv) The promote foreign demand and export of different products which are comparatively cost advantage production. This will increase the overall demand and will help in economic growth. v) To reduce the burden of government and make productive investment. Due to productive investment there can increase the employment and capital base and infrastructure of the economy. These all will help to grow the economy faster. Economy can reach and expand more better level.