Growth of an economy is linked to economic progress and advancement. Economic growth can be described as an increase in capacity of an economy to produce goods and services within a certain period of time. In economics, economic growth indicates a long-term expansion of the productive potential of the economy to satisfy the wants of individuals in the society. What are the factors behind economic growth?
A factor that can affect the growth of an economy is the quality and quantity of all available human resources. For economic growth of a country to be achieved it should find a balance in the quality and quantity of human resources. It should be enough in number with the right skills and abilities.
Natural resources contribute to economic growth in a big way. These are comprised of resources that are given to us by nature either on land or beneath it. These include plants, water resources, land, natural gas, oil, metals and minerals. Countries with abundant natural resources enjoy a good amount of growth than countries with a small amount of it.
Capital formation is the production and acquisition of man made products. These products include machinery, transportation, and power. Capital formation increases capital/labor ratio because it increases the availability of capital per worker.
Technology is very important to the growth of an economy as it can increase productivity even with limited amount of resources. Countries that have focused on technological development have seen rapid economic growth than those with less focus on technological development.
Social and Political Factors
A society’s customs, values, tradition and beliefs contribute to the growth of an economy. Achieving growth may prove difficult for a society with beliefs that oppose adapting to a more modern way of living. Political factors such as the government implementing different policies also have a factor in economic growth.