Causes of economic growth
For economic growth to take place either, or both, of the following must happen
- An increase in resources (natural, human and or capital) available to a country - Quantity
- An increase in the efficiency with which a country's resources are used in the production process. Quality
Have a look at section 4.1 Economic Development on growth and
development for a more detailed view of how these increases can happen.
Clearly, the role of investment is essential in increasing the amount and ability of resources available to bring about economic growth. This investment may be in:
- physical capital, e.g. building nuclear power stations, roads or wind farms
- human capital, e.g. building more schools and universities
- natural capital (or the stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future), e.g. establishing more national parks, sustainable forests