what are the factors that influence long term economic growth? provides historical examples to back up your explanation. ( I want the answer computer typing NOT handwriting)
The factors influencing the economic growth of a country may be divided into 2 parts:
(A) Economic factors
(B) Non-economic factors
(A) Economic factors:these are the factors influencing the business environment in a country.
(i) Capital formation: Capital formation is one of the first steps towards development.For example:capital accumulation in China since the early 1950s.
(ii)Availability of resources:the availability of natural resources plays a huge role in the development of a country.For example:
Norway- is the 2nd largest exporter of natural gas and 5th largest exporter of oil.It is one of the richest economies.
Botswana:exports 29% of the diamonds and is the fastest growing economy over the past 40 years.
(iii)Marketable surplus of agriculture:The importance of agriculture is evident from the fact that the green revolution preceeded the industrial revolution.Also, surplus of agriculture leads to increase in international trade with other countries,leading to economic prosperity.Example:Post Independence i.e. during 1950-51, 59% of India's national income came from agricultural sector.
(iv)Foreign trade:Foreign trade and exchange is extremely important for the development of a country since it not only opens up foreign markets with higher price points or better opportunities to sell in but also brings in foreign exchange.For example:the economic and trade reforms in Poland since 1990s to aid and reform the foreign trade practices prevelant then.
(v) Economic system and structure:Whether the economy is capitalist or socialist or mixed has a huge impact on it's development and growth.for example,Sweden is a socialist economy whereas the US is a capitalist economy.In the former case,there is more of public sector whereas in the latter there is more of private sector.
(B)Non-economic factors:these factors arise due to the social,cultural and other environments contemporarily affecting the economic factors or economic growth.
(i)Human Resource:A country's economic growth depends in a major way on the labour availability and efficiency.Republic of Croatia,Czech Republic,Hungary,Austria,Estonia are countries which focussed on the improvement of their Human Resource Development Index to attain economic growth.
(ii)Technical know how:The Availability and flow of latest technology to a country speeds up the process of growth.For example: Robert M. Solow studied the contribution of education to the increase in output per man hour was more than that of any other factor in the United States during 1909-1949.
(iii)Political factors:The political framework and government policies play a major role in the trade practices and Economic growth of a country.Example:Dadabhai Naoroji has explained in his classic work ''Poverty and Un-British Rule in India's that it was in that period when wealth was drained out of India leading to high levels of poverty in the country.
(iv)Social organization:As in case of India,due to non-efficient social organization,wealth is concentrated only in a few hands and there is found to be a growth in Monopoly which also leads to the concentration of economic power which hinders the overall growth and development.
(v) Corruption: Corruption causes an impediment in the process of economic growth;as in the case of Pakistan since 1987
(vi) Thrust to develop:In order to develop,a country must devise strategies and formulate plans which aim at achieving growth.For example,the first five year plan of India was for agriculture development and acheived a growth over it's target which was 3.6% followed by the second five year plan focussed on industrial development which acheived a growth rate of 4.1%.