Question

What are the top 5 leading factors that would explain the success or failure of economies?

Answer 1

Economists generally agree that economic development and growth are affected by four factors: human resources, physical capital, natural resources and technology. Highly developed countries have governments that are focused on these areas. Less developed countries, including those with high levels of natural resources, will lag behind when they fail to promote technological research and improve the skills and education of their workers.

The skills, education and preparation of the workforce have a significant impact on the development of the economy. A professional, well-trained workforce is more competitive and creates high-quality production that adds value to the economy. Lack of skilled labor may be a barrier to economic development. The under-utilized, illiterate and unskilled labor force would be a burden on the economy and may contribute to higher unemployment.

Improvements and increased investment in physical infrastructure – such as bridges, equipment and factories would reduce costs and improve the productivity of economic production. Factories and machinery that are new and well maintained are more efficient than manual labor. Higher efficiency contributes to higher production. Labor is more competitive as the amount of capital expenditure per worker increases. Improving labor productivity raises the growth rate of the economy.

The quantity and quality of natural resources have an effect on the pace of economic development. The discovery of more natural resources , such as oil or mineral reserves, would improve the economy by increasing the country's production potential. The productivity of the county in the use and utilization of its natural resources depends on the abilities of the workers, the form of technology and the availability of capital. Skilled and trained workers are able to use these natural resources to boost the development of the economy.

Technology improvements have a high impact on economic growth. As more discoveries are made by the scientific community, managers find ways to apply these innovations as more sophisticated production techniques. Applying better technology means that the same amount of labor will be more productive and economic growth will increase at a lower cost. Countries that recognize the importance of these factors that have an impact on economic growth will have higher growth rates and improved living standards for their people. Technological innovation and more training for workers will improve economic output, which will lead to a better living environment for all.