Question

3. How can a country experience economic growth?

Answer 1

The follow six causes of economic growth are key components in an economy. Improving or increasing their quantity can lead to growth in the economy.

1. Natural Resources

The discovery of more natural resources like oil, or mineral deposits may boost economic growth as this shifts or increases the country’s Production Possibility Curve. Other resources include land, water, forests and natural gas. all these resources play a vital role in economic growth. they are the backbone of any country's economic growth.

Realistically, it is difficult, if not impossible, to increase the number of natural resources in a country. Countries must take care to balance the supply and demand of scarce natural resources to avoid depleting them. Improved land management may improve the quality of land and contribute to economic growth.

For example, Saudi Arabia’s economy has historically been dependent on its oil deposits.

2. Physical Capital or Infrastructure

Increased investment in physical capital such as factories, machinery, and roads will lower the cost of economic activity. Better factories and machinery are more productive than physical labor. This higher productivity can increase output. For example, having a robust highway system can reduce inefficiencies in moving raw materials or goods across the country which can increase its GDP. similarly well connected railway systems helps industries to develop and prosper and makes country grow exponentially.

3. Population or Labor

A growing population means there is an increase in the availability of workers or employees, which means a higher workforce. One downside of having a large population is that it could lead to high unemployment. higher workforce means more labor available at cheaper rate. this leads to growth of labor intensive industries. countries with less technological growth and benefitted a lot with cheap skilled labor.

4. Human Capital

An increase in investment in human capital can improve the quality of the labor force. This would result in an improvement of skills, abilities, and training. A skilled labor force has a significant effect on growth since skilled workers are more productive. For example, investing in STEM students or subsidizing coding academies would increase the availability of workers for higher-skilled jobs that pay more than investing in blue collar jobs.

5. Technology

Another influential factor is the improvement of technology. Technology could increase productivity with the same levels of labor, thus accelerating growth and development. This means factories can be more productive at lower costs. Technology is most likely to lead to sustained long-run growth.

6. Poor health and low levels of education

People who don’t have access to healthcare or education have lower levels of productivity. This means the labor force is not as productive as it could be. Therefore, the economy does not reach the productivity it could otherwise. thus the level of education, health care facilities, clean drinking water and sanitation should never be compromised.

7. Lack of necessary infrastructure

Developing nations often suffer from inadequate infrastructures such as roads, schools, and hospitals. This lack of infrastructure makes transportation more expensive and slows the overall efficiency of the country. they form the backbone of upcoming generation and thus are most essential for the growth of an economy.