Economic Growth Supply Factors
Sustained economic growth increases the standard of living in a country and stimulates high employment rates. Higher employment rates encourage business growth and production, further expanding the economy. In countries that impose federal income taxes, higher employment translates into an increase in tax revenues for the federal government, helping to support and expand federally funded programs. The supply factors that effect economic growth include the supplies of natural resources, human capital, technology and capital goods.
The natural resources factor in economic growth has the goal of maximizing the use of a country’s natural resources to discover a balance between the supply of natural resources and the demand for them. In theory, this increases the standard of living for the people of a country, leading to economic growth. It is difficult, if not impossible, to increase the amount of natural resources in a country, barring the discovery of new sources. Countries must take care to balance the supply and demand of scarce natural resources to avoid depleting them.
The human resources factor in economic growth has the goal of fully utilizing human capital by increasing the quantity of skilled people in the workforce, as well as enhancing the quality of their skills. Countries achieve this goal through the training and education of its people. When a country maximizes the utilization of its human capital, in theory, it increases the quality and quantity of the output of goods and services for the country’s economy.
An increase in advancements in technology also leads to economic growth. These advancements allow workers to produce capital goods more quickly and efficiently, while lowering the overall production costs. This increases the overall supply of capital goods in an economy, leading to economic growth. Advancements in technology often improve the quality of life for people, allowing them to be more productive in their jobs. This leads to an additional increase in the amount of capital goods in an economy, helping to further encourage economic growth.