Question

What are the the determinants of economic growth? Explain each.

Answer 1

Economic growth is the rise in production off economic products and services shown when two time periods are compared. Economic growth is influenced by certain factors is referred to determinants of economic growth. The determinants of growth are classified under supply factors such as technology, human resources, natural resources and capital goods. Other than that efficiency factor and demand factors are also other determinants.

SUPPLY FACTORS

In economy, Supply factors are the factors which affects the goods and service value .

* Natural resources

Natural resources comprises of all has exploitable economic value in nature. If the quality and the quantity of natural resources is high then economic growth rate will be high. Valuable metals, wild life, fossil fuels are all the examples for the same.

*Human resources

Skilled and unskilled workforce comes under the category of human resource. Rate of economic growth is also influenced by the quantity and quality of workers. The skill excellence is the quality and number off working people is the quantity. High value off goods can be achieved through skilled labors.

* Capital goods

All tangible assets in the production process such as machineries, plant are all capital goods. Although capital goods require initial investments it increase economic growth.  

* Technology

Technology is the procedure and methods adopted by a business for enhance production. Researches helps to invent more and advanced technologies. Advanced technology increase the production rate and enhances economic growth.

DEMAND FACTOR

In economy thee supply factors which increases supply of goods keeps sustainable through rise in demand are demand factors. Price of goods, quality of products, efficient advertising etc enhances demand for goods and services.

EFFICEINCY FACTOR

Efficiency factors which gives high output to the available input. Productive and allocative efficiency comes under efficiency factor. full employment increases productive efficiency. Low cost for input increase cost efficiency.