Question

List 5 different things that could cause economic growth in a country. In other words, what causes GDP or NI per capita to increase over time? Or what makes the income of an average person in a country go up over time? There are many different possible explanations

- list must include at least two social, political, or ecological (non-economic) causes of growth

Thank you so much!

Answer 1

Following are causes which help in the economic growth in a country.

1) Resources: Resources are inputs in the production of goods and services. They are also referred as factors of production. They can be

Natural Resources:: Natural resources are the natural endowments on the physical land. Natural resources such as oil, gas, minerals and timber are expected to play a significant role in growth of national income and economy. Historically, US benefits from coal, South Arabian Gulf countries have oil resources.

Human Capital: Human resources are playing an important role in attaining economic development of a country. Economic development of a country involves proper utilisation of its physical resources by its labour force and other forms of manpower for the proper utilisation of production potential of the country. Human resources can increase in two ways.: Increase in number of workers and increase in the knowledge and skills of workers. Therefore, education, trade forces and immigration policies are very important for economics development of a country

Physical Capital l: Physical Capital are the tools and equipment used in the production of goods and services. Investment in physical capital can increase worker's productivity and therefore, increase living standard of people of the country.

2) Technology: Technology is the knowledge available for use in production. New technology enables us to produce more whole using fewer of our limited resources. Technological advancement introduces new techniques or methods so that firms can produce more valuable outputs per unit of input and thus helps in increasing National income. Typewriters and personal computers are the examples of economic development.

3) Institutions: Finally, the institutions matters most for economic growth. The term Institutions describe the environment in which decisions are being made. This is influenced by socia-cultural economic and government policies that impact the way we navigate thel decisions making and investment.

Private property rights : A well enforced property rights provide incentives for individuals to participate in economic activities, such as investments, innovation and trade, which lead to a more efficient market.

Political stability and the rule of law: it is most consistent and trustworthy enforcement of nation's law. These laws are defined and must communicate so that everyone knows them. Most importantly the laws appealed and applied to everyone equally. When the rule of law is violated, it becomes difficult for individuals to invest in long-term plans because future pay outs are unpredictable.

Stable money and prices: Price stability is vital to economies because price levels determine inflation and deflation which affects an economy. Prolonged inflation and deflation result ls in a decline in the value of money and purchasing power of public which affects their growth.

Competitive and open markets Free trade increases access to higher quality, lower-priced goods. It increases overall trade- exports and imports which helps in generation of foreign exchange which helps in growth of national income.

Efficient Taxes: Taxation on good, income or wealth influence economic behavior and the distribution of resources. For example, higher taxes on carbon emissions will increase cost for producers , reduce demand and shift demand towards alternatives. We'll defined tax policy can increase economic growth of a country.