Economists generally agree that economic factors affecting economic growth and development are: human resources, physical capital, natural resources, technology development, entrepreneurship, population growth and social overheads. In this article, we will discuss in detail regarding the various economic factors and what measures need to be taken for ensuring economic growth.

Economic Factors Affecting Economic Growth

1) Natural Resources

• Natural resources are the most important factor influencing an economy's development.
• Natural resources include land area and soil quality, forest wealth, a good river system, minerals and oil resources, a favourable climate, and so on.
• The abundance of natural resources is critical for economic growth. A country lacking in natural resources may be unable to develop rapidly.
• However, the availability of abundant natural resources is a necessary but not sufficient condition for economic growth.
• Natural resources are unutilised, underutilised, or misutilized in developing countries. One of the reasons for their backwardness is this only.
• Countries such as Japan, Singapore, and others, on the other hand, are not endowed with abundant natural resources, but they are among the world's developed nations.
• These countries have demonstrated a commitment to preserving available resources, putting forth their best efforts to manage resources, and minimising wastage of resources.

2) Capital Formation

• Capital formation is the process by which a community's savings are channelled into investments in capital goods such as plant, equipment, and machinery, which increases a country's productive capacity and worker efficiency, ensuring a greater flow of goods and services in a country.
• The process of capital formation implies that a community does not spend its entire income on goods for current consumption, but rather saves a portion of it and uses it to produce or acquire capital goods that significantly increase the nation's productive capacity.

3) Technological Progress

• Technological progress primarily entails research into the use of new and improved methods of production or the improvement of existing methods.
• Natural resources are sometimes made available as a result of technological progress. However, in general, technological progress leads to increased productivity.
• In other words, technological advancement increases the ability to make more effective and fruitful use of natural and other resources for increasing output.
• It is possible to obtain a greater output from a given set of resources by using improved technology, or a given output can be obtained by using a smaller set of resources.
• Technological progress improves the ability to make better use of natural resources, for example, with the aid of power-driven farm equipment, agricultural production has increased significantly.
• The United States, United Kingdom, France, Japan, and other advanced industrial nations have all gained industrial strength through the application of advanced technology.
• Adoption of new production techniques, in fact, facilitates economic development.

4) Entrepreneurship

• Entrepreneurship entails the ability to identify new investment opportunities, as well as the willingness to take risks and invest in new and growing business units.
• The majority of the world's underdeveloped countries are poor not because of a lack of capital, lack of infrastructure, unskilled labour, or a lack of natural resources, but because of a severe lack of entrepreneurship.
• As a result, it is critical in developing countries to foster entrepreneurship by emphasizing education, new research, and scientific and technological advancements.

5) Human Resource Development

• A good quality of population is critical in determining the level of economic growth.
• As a result, investment in human capital in the form of educational, medical, and other social schemes is highly desirable.
• Human resource development improves people's knowledge, skills, and capabilities, which increases their productivity.

6) Population Growth

• The increase in labour supply is a result of population growth, which creates a larger market for goods and services. As a result, more labour produces more output, which a larger market absorbs.
• Output, income, and employment continue to rise as a result of this process, and economic growth improves.
• However, population growth should be expected to be normal. A galloping rise will stifle economic progress.
• Only in a sparsely populated country is population growth desirable. It is, however, unjustified in a densely populated country like India.

7) Social Overheads

• The provision of social overheads such as schools, colleges, technical institutions, medical colleges, hospitals, and public health facilities is another important determinant of economic growth.
• Such facilities help the working population to be healthier, more efficient, and more responsible.
• Such people have the potential to propel their country's economy forward.

Measures Taken to Ensure Economic Growth

• Economic growth can be achieved when the rate of increase in total output exceeds the rate of increase in a country's population.
• A country's human resources should be sufficient in number and equipped with the necessary skills and abilities in order to achieve economic growth.
• The efficient utilisation or exploitation of natural resources is dependent on human resource skills and abilities, the technology used, and the availability of funds.
• A country with a skilled and educated workforce and abundant natural resources propels its economy forward.
• Capital formation increases the availability of capital per worker, which raises the capital/labor ratio even further. As a result, labour productivity rises, leading to an increase in output and economic growth.
• Technological advancement aids in increasing productivity with limited resources. Countries that have worked in the field of technological development grow faster than countries that have placed less emphasis on technological development. The selection of appropriate technology is also important for an economy's growth.

Conclusion

Governments in developed countries are focused on these economic factors. Less-developed countries, even those with abundant natural resources, will fall behind if they do not promote technological research and improve workers' skills and education.

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