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- 1 What are the factors behind the growth of economics?
- 2 What are the major differences between a developing and developed economy?
Economic growth
Economic growth is determined by advancements and progress that have undergone in economics. We can also define it as growth in the volume of an economy to manufacture goods and services within a certain period.
Meaning of Economic Growth
One of the significant characteristics of Economic growth is that it can never be consistent or the same in all economic sectors. For instance, during a certain period in a year, a country’s silk manufacturing industry marked a significant contribution in terms of economic growth whereas the telecommunication firm did not perform well in terms of economic growth in the country. Consequently, a positive impact on the volume of goods and services generated by a country is what we call economic growth. Gross Domestic Product (GDP) is complementary to Economic growth.
There are many reasons why the economic growth of a country may get hampered, for instance, shortage in trade and changes in expenditures by the government administrations. When there is a tiny increase in the price of goods and services, then negative economic growth is witnessed.
What factors drive economic growth?
We will look at 3 factors that affect economic growth. In this article, we focus on human resources, technology, and natural resources.
Human Resources
The country’s economy can either grow economically or die economically if human Resources aren’t well utilized, For example in India. India has an outstanding population growth, but a huge percentage of the population is in the working age. While most of the individuals in the working age bracket are well-educated and have impressive working skills.
That is what has resulted in or else a poor country like India rapidly becoming one of the lively growing economies in the world. India’s human resources have resulted in this positive impact on the economy. India became an IT superpower. There could have been extensive crime if the people weren’t educated and had these impressive working skills.
A country’s government should ensure that its citizens have access to better healthcare, quality education, and better infrastructure if they want to grow economically.
Technology
Technology has largely played a crucial role in economic growth. The industrial regime change was started due to technological progress. Mankind has never regretted nor looked behind ever since. The things that have changed in technology over the years are the technology applications.
Technology has made a positive impact on economic growth. From producing, manufacturing, and services and then inventing social media, technology still propels business growth and employment. It has resulted in countries with large technological expertise developing much faster than others economically.
For instance, if we look at Germany, it’s a better-developed country than its European counterparts. Germany was affected by both world wars and communist work over the years. But we can say the German economy has grown due to technology. Experts have said that this development has been brought forth since Germany decided to put much emphasis on technology development.
Natural Resources
Natural resources make economic growth simpler and easier. Natural resources are among the factors that stimulate economic growth.
A perfect example is the case of countries like Dubai or other Middle East nations. These countries are considered to be rich in oil resources and have been the major component of their economies. Countries like Singapore are rich in good natural harbors and have since been the main convey point. Other countries also have resources such as coal deposits, iron ore deposits, or even diamond and gold.
These natural resources can also lead to war between countries which may lead to significant negative changes in the economy. For instance, Congo is one of the countries in Africa that is well blessed in terms of natural resources but the poorest in the whole continent. The war between citizens and poor government administration has led to Congo being poor and the worst economic growth since its independence.
Difference between developed and developing economies
Exceedingly low personal income, an imbalanced economy, poor infrastructure, and lesser growth rates distinguish developing economies. Developing economies frequently lack the required skills to escape the reliance on agricultural products and mineral resources. Developed economies are mainly characterized by higher income per capita. Their reliance on industrial products and advanced technology also reveals developed economies.
Developed economies are normally distinguished as more industrialized economies, have a well-equipped infrastructure, and a large number of its citizens’ income is higher. On the other hand, a developing economy is an economy with lower per capita income. It usually has poor infrastructure while the literacy rate is very low.
Developed economies generally have higher Gross Domestic Product (GDP) per capita. That indicates that there is a high level of economic output and higher income per person.
Therefore, we can say that a developed economy is one characterized by technological development, an ascending graph of the economy, and a high per capita income. A developing economy is not easily defined by words. However, you can distinguish it as an economy that is not well developed like the rest of the world. They can be classified by their per capita income.
Developed economies generally have higher living standards with good healthcare, education provided is easily acquired and of the best quality. On the other hand developing economies have higher illiteracy levels with poor working quality skills and crimes are higher with poor governance from its administration.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
