Important Factors that Affect the Economic Growth of a Country

Before knowing about the important factors that affect the economic growth of a country lets know what is the meaning and importance of economic growth. Economic progress and advancement are directly associated with the term of economic growth. The capacity to increase the production of goods and services within a specific period of time is defined as Economic growth. National income and level of employment have a positive impact on economic growth which further results in higher living standards. Comparing the level of Gross National Product (GNP) with the GNP of the previous year is a way to measure the economic growth of a country. By analyzing the strengths and weaknesses of the economy properly affects a great impact on the economic growth of a country.

The increase in the percentage of GNP of a country directly is related to the growth of economic growth. in short economic growth relates to increment of per capita national output and net national product of the country that remains constant or sustained for a couple of years. There are number of factors that can hamper the economic growth of a country for eg. Alterations in government bodies expenditures and trade deficit.

Some important factors of economic growth of a country

a.    Human Resource:

This is one of the most important factors which affects economic growth. The quantity and quality of human resources directly affect the growth of the economy. The skills, creative abilities, training and education of human resources play an important part in this. The output quality will directly depend on the human resources of the country, whereas a shortage of the same hampers the growth of the economy. Therefore it is very important to maintain the availability and quality of human resources for the good growth of the economy.

b.    Natural Resources:

This affects growth to a large extent. The resources produced by nature i.e produced either on the land or beneath the land are known as natural resources. Plants, Water resources and landscape are some examples of natural resources on land an oil, natural gas, metals, non-metals and minerals under the ground are known as resources beneath the land. Countries with higher natural resources have good growth than countries with a small number of natural resources. The skill and ability of human resources and technologies affect the utilization of natural resources.

c.    Capital Formation: 

Producing and acquiring all man-made products such as Infrastructure of building, land, machinery power, the medium of communication and transportation is termed capital formation. An increase in capital/labor ratio depends on the availability of capital per worker. An increase in the productivity of labor ultimately increases output and growth of the economy.

d.    Technological Development:

Technology plays a very important role in the growth of the economy. The increase in productivity with limited resourced shows technological development. There is a rapid growth in the economy for countries that have worked in the field of technological development compared to the countries which have a lesser focus on technology. Right technology plays an important role in the development of technology which means inappropriate technology results in hi cost of production.

e.    Social and political factors: 

This is one of the factors which play a very crucial role in the economic growth of a country. Customs, traditions, values, and beliefs are some social factors that contribute to the growth of the economy of a country to some extent. The participation of the government in formulating and implementing policies is one of the political factors that has a major part to play in economic growth.
Important Factors that Affect the Economic Growth of a Country Important Factors that Affect the Economic Growth of a Country Reviewed by Bella Jonson on February 07, 2020 Rating: 5

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