Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time.
•Accumulation of capital stock
•Increases in labour inputs, such as workers or hours worked
•Technological advancement
Can all be factors that contribute to the growth of an economy let us break them down individually to see how.
•Accumulation of capital stock
Superior capital equipment directly makes individuals, businesses and countries more productive and efficient. Increased efficiency leads to economic growth. The most important, consistent and controllable way to grow an economy is through improved capital goods structure and growing capital stock, which is where capital investment comes in.
Capital goods include assets such as factories, machines, computers, vehicles, tools and other productive equipment. And capital investment is the spending of saved money on capital goods. Increased capital investment allows for more research and development in the capital structure.
Improved capital goods and the expanding capital structure increase labour productivity and raise the productive efficiency. A simple example of this can be seen when a lumberjack upgrades from a standard axe to a chainsaw.
•Increases in labour inputs, such as workers or hours worked.
Sustained long-term economic growth comes from increases in worker when more people or more productive people enter the workforce. Those are workers who never stop reading, learning or making an effort to put in the work. It’s workers who make a determined effort to continually develop their skills.
They’re better resources or assets to businesses and the economic development as a whole. With growth in labour productivity, an economy is able to produce increasingly more goods and services for the same amount of work. And, because of this additional production, it’s possible for a greater quantity of goods and services to ultimately be consumed for a given amount of work.
•Technological advancement
As with the advent of the internet, technology has improved and made things a little bit simpler for us. We are now more connected to the world and to one another online. Many new kinds of jobs are being created that purely rely on technology advancements. Technology has allowed us to change the way we work as well as the structure of the office environment. Technology is helping economies by reducing the costs of production, encouraging growth of new business and advancing communication.