Question

Some countries in the world have a higher levels of GDP per capita than others. With this knowledge, discuss the factors that are responsible for causing economic growth.

Answer 1

Economic growth refers to the increase in the overall production of goods and services of the country. Increase in production increases the profit and GDP of the country and increases the purchasing power of the nation. Economic growth helps in increasing the living standard of the people. Increase in production leads to employment generation in the economy.

For this reason there are various factors which contribute to the economic growth :-

Availability of healthy and productive human resource - human resource is very important factors of the economic growth as humans directly take part in production. Therefore it is very essential for the country to ensure that human are healthy and skilled to provide their services. If a counrty has higher death rate and suffering from illness, it can not grow.

Technology - technology plays very important role in the growth. Everyday new innovations are going on and this is evident that the countires which adopt new technology faster grow faster. Everyday new ways of production are coming and most of the developed countries are leading in technology which is the reason for their economic growth. Japan is the best example economics growth through technology

Government policies - favourable government policies such as monetary policy, fiscal policy, interest rates, tax rates plays a major role in economic growth of the country. Positive chnages in these elements helps people to grow.

Natural resources - natural reaources means land, mineral, coal, gold, rivers, water etc. Helps an economy to the great extent. Availability of these resources save the cost of importing whereas scarcity of resources in underdeveloped countries hampers its economic growth. However it should be noted that to extract these resources resources countries must have skillful human resource and technology. USA, UK, France are the countries which are rich in natural resources. There are some countries which are rich in natural resources but do not have sufficient technology and manpower to use them.

Political stability - if there is no stability in the government structure and government is changing frequently, it will effect the economic growth. Because new government brings new regulations and changes in the laws and regulations frequently interrupt the flow and normal going of the business therefore it is very important for government to be fixed and stable.