Excerpted from Table 1. The study goes on to try to explain the reasons for the divergent growth trends.
Economic growth is achieved when the quantity or quality of such determinants of economic growth increases due to population growth, investing, innovation, or educational improvements. The aforementioned factors facilitate economic growth by increasing productivity.
For example, a large and skilled workforce allows a region to produce more goods at a faster rate. Increased availability of capital, land, or entrepreneurs in a particular market means more resources can be used to provide the goods and services that society wants and needs, consequently causing salaries to rise and the standard of living to increase.
There are three primary means for the quantity of labor to increase. The first is natural population growth.
Immigration from other regions or countries represents the second way. The third is increased rates of participation in the workforce from eligible members of the population — labor quality is improved through formal education or employer sponsored training. Economic growth through labor is attained in several ways.
A high employment level means that companies have the necessary manpower to produce, service, and sell the goods and services that the population demands.
Furthermore, the income levels for the entire region or country increase if a high proportion of citizens are employed. This means that consumer demand will remain steady or increase.
Ad One of the determining factors of economic growth that increases productivity is capital. Capital goods are products, buildings, or infrastructure used to manufacture or provide goods and services demanded by the people.
Factories, tools, roads, and transport vehicles represent capital goods used by businesses to develop and distribute products and services efficiently.
The availability of capital determinants of economic growth is increased by production or acquisition; the quality of capital goods is improved through technological innovations.
Natural resources are determining factors of economic growth that serve as factors of production. For example, water may be used to power generators in manufacturing plants or oil may be used to fuel machinery used to transport goods and services to markets.
Most natural resources are scarce and cannot be replenished. Consequently, the only way the quantity of natural resources can be increased is through exploration that discovers new sources of the resource in question.
Investments are the final determinants of economic growth. Essentially, investing is the conscious decision to produce capital goods instead of consumption goods in exchange for future returns on investment.11 2 Determinants of Economic Growth We shall not cease from exploration, And the end of all our exploring Will be to arrive where we started And know the place for the ˜rst time.
Economic growth can be measured either as an increase in real GDP over time or as an increase in real GDP per capita over time. How much has REAL GDP grown in the US since ? Real GDP in the US has grown at an annual rate of about % since a critical determinant of growth, but there is some evidence of a nonlinear relationship.
At low levels of political rights, an expansion of these rights stimulates economic growth. For a given starting level of real per capita GDP, the growth rate is enhanced by higher initial schooling and life expectancy, lower fertility, lower government consumption, better maintenance of the rule of law, lower inflation, and improvements in the terms of trade.
Determinants of Economic Growth: The Case of Guatemala Maria Sophia Aguirre Department of Economics The Catholic University of America To understand the relevance of population and family to the economic growth process in Guatemala.! To investigate how the family engages in the process of economic growth.!
To empirically identify what. Nov 04, · Labor, capital, natural resources, and investment are all determinants of economic growth. Economic growth is achieved when the quantity or quality of such determinants of economic growth increases due to population growth, investing, innovation, or educational improvements.