The word “economic growth” is related with economic betterment. Economic growth can be described as a boost in the economic-capacity of a country or all over the globe to generate goods as well services within the confined period. As per some economists, economic growth is defined as the increment in productive power and potential of the worldwide economy which results in increasing national as well as international income.
There exist various factors that support the world economy. And, on the contrary, there are many attributes that emphasize on affecting the economy negatively.
Effective Economic Growth Factors
Following are the factors that support the global economy to get expanded with time:
A. Gross capital
An increase in gross capital can be seen by investing in the sectors of machinery, factories, construction agencies, power, transportation and any modes of communication. Creating and owning all these products, considered as capital formation. Capital formation helps in increasing capital/labor ratio. In turn, the labors’ capacity and productivity rise which further increase the output.
B. Natural Resources
When some new natural resources are found, it supports the world economy by all possible means. These resources may include natural minerals and oils. The discovery of such natural resources helps in increasing the production potential of a country. To maintain the desired level of natural resources, a country should maintain balance in between demand and supply of these resources.
C. Human Resources
The quantity, as well as quality of human resources, matter a lot to a specific country. An enough investment in human resources can introduce comparatively more ease in collecting quality labor/functioning team. A cream workforce can help in growing the economy of a country. To let human resources, improve the world economy, should be full of creativity, skills, knowledge and much more capabilities.
D. Legit Rules
Each country has a legitimate base that constitutes the economic functions of a company by some set rules and regulations. Though there are no laws defined to promote the economic growth of any country, these laws should be regulated in a manner that they never restrict a nation to grow economically.
With an increase in population, workforce also increases, but the population should be limited to certain criterion because more population can confine the already available resources of a country. If the population increases to the desired level, then it can support world economy, but if the population keep on increasing beyond the extreme, then it may cause unemployment and economic-degradation.
A very important factor that supports the economy is technology. It can help in increasing productivity, and in turn, amplifies growth and powers up capabilities.
Factors that can affect Economic Growth
Following are the factors that may affect global economy badly:
A. Ignored Health & Poor Education Standards
Some countries don’t emphasize on quality education and health as well as medical facilities. Ignorance in these sectors may cause considerable harm to the economy. People who are not able to gain much-needed knowledge and medical services, cannot contribute to cornerstone world economy.
B. Social & Political Factors
Social and political attributes play an essential role in economic growth. Social attributes include culture, customs, values, traditions, and beliefs that may affect world economy to a great extent if not implemented at the appropriate place. Political instability may cause an imbalance to investors’ profile in a country and restrict investments.
C. Underprivileged Infrastructure
Emerging and struggling countries mostly face inconvenience due to inappropriate infrastructure that includes hospitals, schools, colleges, etc.
D. The World Trade Organization
Some developed countries consider that World Trade Organization favors developing countries comparatively more and in turn, provides more facilities and trading services to developing countries. This thought process leads developed countries to implement some unwanted strategies which cause harm to trade system.