Question

Lets say you are an economic developer of a small poor country. How can you encourage productivity within your country to increase GDP?

Please give at least 3 ways to achieve this

Answer 1

Productivity can be encouraged in a small, poor country in order to increase GDP by the country increasing its investment in education, encouraging competition, and investing in smarter research and development.

i. Investment in education - The government of the small poor country can increase its investment in education so that it improves the skills of its workforce. Improvement of the skills will enable the workforce to increase its productivity since they will have better skills. With improved production, the GDP will increase.

ii. Encouraging competition - Competition normally promotes the growth of productivity via the increased innovation incentives as well as via selection. Therefore, if a government creates laws that promote competition, it will be able to increase productivity which will, in turn, make the GDP increase.

iii. Investing in smarter research and development - Improving the allocation of research and development funds can improve the prospects for increased productivity. Therefore, the government of the small poor country should smartly increase the funding for research and development so that it can find new innovative ways that can improve production and hence lead to GDP increase.