Question

Long-Run Economic Growth and Natural Resources

List four reasons why some countries with limited natural resources, such as Japan and Singapore, have been able to achieve high rates of long-run economic growth,

Answer 1

Even though there might be a shortage of natural resources the following factors would still contribute to long run economic growth.

1. A growing Population or Labor: An increase in the availablity of labor leads to a higher workforce in the market. Hence even with limited natural resources the high rates of long-run economic growth are achieved.
2. Increased Investment in human capital: An increase in investment in human capital leads to an increase in expertise the employees. Which increases efficiency. Thus even with limited natural resources the high rates of long-run economic growth are achieved.
3. Improvement of technology: Even with the same amount of labor an improvement in the technology leads to an increase in the productivity. Hence even with limited natural resources the high rates of long-run economic growth are achieved.
4. Physical Capital or Infrastructure Investment increase: Better machinery in factories and machines can lead to increase in the productivity, resulting in an increase in output. Hence even with limited natural resources the high rates of long-run economic growth are achieved.