- April 14, 2020
Why Economies Grow
Theincrease of produced goods and the services per person over aspecific period is what is termed as economic growth. A freshdevelopment theory has made economists focus on several old butimportant issues in the study of economies of various nations(Greineret al., 2016, p IV).However, the trends of economies of countries vary. Some experienceupward drift while others record a negative trend. Economies advancebecause of the influence of natural resources, investments inphysical and human capital and entrepreneurship.
Whena country is endowed with natural resources like land or water, itmay experience an improved economy. Such nations can produce goodscheaply by exploiting the readily available raw materials. Economiesmay also develop due to investments in physical and human capital(Greineret al., 2016, p9).Countries that effectively train and educate their citizensexperience economic growth since these people provide skilled labor.Moreover, a state may invest in such things as factories andmachinery which would help them improve their economy. The presenceof entrepreneurs in a country also contributes to the growth of theeconomy. Such individuals contribute positive ideas which areimplemented to better the economy (Greiner et al., 2016, p2).
Economicgrowth alters other economic indicators like the unemployment rate,wages and income and interest rates. When there is an improvedeconomy, then there is the creation of more jobs. It is attributed bythe eruption of many industries which provide employment. It alsoleads to an increase in income and wages. The remuneration of workersis ameliorated when the level of the economy is on the rise (Greineret al., 2016, p165). Additionally, it leads to lower rates of lendingmoney. Because finances are readily available in a country that isexperiencing improved economy.
Thelevel of technology is also a vital determinant of positive economicgrowth. Technical advancement may be defined as new and improvedmeans of undertaking various activities and new methods of usingscarce resources more productively. When there is positive progressin technology, then there is a rapid rise in the economic growth(Greineret al., 2016, p164). The advancement evaluates the efficiency withwhich several inputs are put together to produce an output. Anenhanced technology, for instance, labor innovation, brings greateroutput from the same quantity of available resources. It involvesprocess and product innovation.
Conclusively,natural resources, investment in both physical and human capital andthe presence of entrepreneurs in the area can accelerate economicgrowth. The level of technology plays a vital role to ensure economicgrowth in a region. The advancement also affects other economicindicators like wages and income and the lending rates in a country.
Greiner,A., Semmler, W., & Gong, G. (2016). Theforces of economic growth: a time series perspective.Princeton: Princeton University Press. Retrieved fromhttp://ekkehard.ernst.free.fr/files/Bibliography/relatedmaterial/Greiner_Semmler.pdf