Economic growth refers to the increase in the total production of goods and services in an economy over a period of time. The most obvious causes are increased demand for goods and higher incomes. But it can also be caused by a number of random fluctuations or by changes in the business cycle. Several structural factors, including technology and human resource, also contribute to growth.
Using the latest technology helps to improve productivity. For example, new machinery and equipment can increase output at a fraction of the cost of physical labor. A well-trained and efficient workforce can help businesses operate more efficiently, thereby increasing the economy’s overall productivity.
Another way to boost economic growth is by expanding the infrastructure. This allows firms to expand their production capacities. It can also lower costs for businesses. Developing countries often lack infrastructure, and this limits their productivity.
Investing in better healthcare and education are other measures that can increase the quality of the workforce and boost productivity. Similarly, increased productivity can be achieved through better managerial and technological methods. The latest developments in information technology are one of the main drivers behind the current state of economic growth.
Increasing the availability of the “golden triangle” of capital, labor, and information will make the long-run growth of an economy easier to achieve. But only a high degree of productivity will yield the desired results.
Other important economic growth factors include population, social, and political factors. A country’s culture plays a big role in determining its growth. A society with a conventional mindset will often resist adopting modern ways of living.