Economic Growth Essay
In any nation, the government policies, institutions, and laws collaborate to create a growth infrastructure which coordinates, enables, and encourages the economic behavior that results in the accumulation of human capital, physical capital, natural resources, and technology. These resources have a role in generating sustained long-run economic growth. Physical capital refers to the tools that are used to leverage the productive ability of an average worker. Physical capital includes transportation equipments, computers, machinery, and factories which facilitate the production of goods and services.
They expand the capacity of an economy to produce goods in the future, thereby promoting economic growth. (Jones, 2002) Human capital refers to the numerous abilities that enable an average worker to apply and understand new, productive knowledge. An increase in the stock of human capital is achieved through education and on the job training. This equips workers with the appropriate skills to increase production, and, therefore, increasing economic growth. Natural resources provide the raw materials that are used in the production of goods and services.
A nation that is endowed with adequate natural resources and has tools to extract them, can acquire the necessary raw materials for production and improve its economic growth in the long-run. Technological knowledge is used to bring scarce resources together to produce the required services and goods. Technology facilitates the production of better and more output from a given quantity of scarce economic resources, and this is what sustains the economic well-being, and drives economic growth of a nation.
(Jones, 2002) The government through its policies and institutions can discourage or contribute to long-run growth. The government can encourage growth by developing power, transport, and other utilities. Growth can also be encouraged by using policies that will result in stable and low inflation. Heavy taxation by the government will discourage economic growth as it will reduce investments in the economy. Reference Jones, I. C. (2002). Introduction to economic growth. New York, NY: W. W. Norton & Company.