For both countries and individuals, economic prosperity is the key element to quality of life and is also necessary for the nation to be competitive in the world economy. As economies move from production-based to ones based on creativity and innovation, they must grow in ways that strengthen industries, create good jobs and encourage economic investment. To increase wealth and living standards, the economy must promote and sustain diversity, innovation, competition and entrepreneurship.
The policymaking process of a country is indicative of its economic freedoms. From tax rates to regulated government spending to credit and product markets, a policy can affect institutions through the political process, giving rise to questions concerning which institutions are necessary requirements for prosperity, and which policies can be put in place that will be most conducive to enhanced economic welfare. For instance, economic liberties are enriched by the freedom to own property, engage in voluntary transactions and transact business.
Competition is one factor that identifies economic growth and development. Two competitiveness surveys, completed by the International Institute for Management and the World Economic Forum in 1996, addressed this topic. Both surveys agree that economic competitiveness emphasizes open international trade, efficient government control and well-functioning capital markets, where financial securities are traded. In addition, the surveys concluded that the skills of the country's workers were of paramount importance to its competitive value.
Education is critical for the long-term health and prosperity of a nation. Economic growth and prosperity depend upon the skills, traits and values of a country’s workforce. Workers' ability to create new technologies and improve efficiency enhances productivity and provides an improved standard of living in a country. Classroom study and experience on the job, as well as pride in jobs well done and communication and analytical abilities, are other important aspects of a strong workforce.
Although the growth rate in a single year is important, it is the long-term change that should be of most concern. Over time, compound interest rates transform small changes into vast differences in wealth creation and standards of living. It is advantageous to boost economic growth so that citizens have more wealth and, consequently, more choices. While there may be a rise in income inequality in the U.S., a correlation exists between economic growth and rising income.