Following are some of the factors of economic growth
- Physical Capital: A rise in investment in physical capital, namely machinery, factories, machinery, and roads, will reduce the cost of economic activity. Efficient factories and machinery result better than physical labour leading to excellent outcomes. For instance, a powerful highway system can lower inefficiencies in shifting raw materials or goods across the country, affecting its GDP.
- Natural Resources: The varied natural resources such as mineral, oil or deposits may enhance economic growth as this shifts or increases the country's PPC (Production Possibility Curve). Other resources consist of water, land, natural gas and forests. For instance, Saudi Arabia's economy has already been reliant on its oil deposits.
- Labor: A population scaling on the next level signifies an increase in the existence of numerous workers or employees, which means a higher workforce. However, a downside of an overall large population is that it could result in higher unemployment.
Challenges of economic growth
- The poor state of health and education: People, who can't visit healthcare or education, don't have productivity. The lack of access to it implies the labour force is not as suitable as it could be. Hence, the economy does not produce outcomes as it could have been.
- Infrastructure quality: Developing economies endure insufficient infrastructure capability with low-quality material on sites like schools, roads and hospitals. It enables transportation dearer and gradually decreases the whole efficiency of the nation.
