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For instance, if you have to compare the standard of living between India and China as per GDP (Gross Domestic Product) produced by respective nations.
Gross domestic product is the total amount of goods and services produced by an economy in a given year. You all might be accustomed to the fact that India's growth rate is less than China, but do you agree with the statement itself?
Here is a solution by our expert.
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Various factors determine the economic growth of a notation some of these factors are limited and scares and cannot be controlled by humans but some of these factors can be used with utmost efficiency to strive a nation towards its potential growth and development.
Natural resources of any nation comprise of oil, land, vegetation, mineral resources that would add as a benefit to increase production. Such resources take years to replenish and are therefore scares. Every economy must ensure that it is using the resources with optimum efficiency and will benefit the nation's growth.
The capital investment depends upon the resources available. A country should invest and use a labor-intensive approach if labor is available in abundance for instance, in India Labor Intensive technique of production will be more effective and cost-saving than capital intensive. This may not be the case in developed countries or countries with less population. In some regions machine, production might be more beneficial and cost-efficient.
Technology plays a vital role in economic growth. Increasing the technological conditions of a nation will give rise to more friendly technologies that will save more than half of the time in doing routine employment. Technological advancement is the main reason many nations have increased their growth rate in recent years.
Law and Institutional Framework:
Certain laws and regulations should be specified when it comes to economic development and growth. It may not be the case in many nations, but this factor acts as a factor to motivate and provide guidance to people responsible for growth. The citizens might be more concerned with the growth and will work towards replenishing the society as a whole.
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Here are some of the formulas from Macroeconomics:
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