Question

In: Economics

What causes economic growth, and what role do small and medium sized businesses play in creating...

What causes economic growth, and what role do small and medium sized businesses play in creating economic growth?

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Economic growth means there is increase in national output and income. Many factors cause economic growth such as tax cuts and high real wages which incrrainc consumption, increased investment, increase in labour force and productivity, improved technology, government spending which increases government expenditure and lower interest rates. Such factors causes increase in economic growth.

Small and medium sized businesses play vital role in creating economic growth. They contribute in terms of production , generating employment and equal distribution of income. It helps to release scarce capital towards its productive use. These businesses help in greater utilisation of raw materials , development of entrepreneurship, provides opportunities for semi skilled workers leading to increase in labour force as well as provide training to increase productivity. It boosts economic growth and development. There contribution to manufacturing sector and GDP as a whole is significant in terms of its share in total value added. This small and medium sized businesses are veritable tool in economic growth.


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