Economic growth is the indicator of a country's prosperity. The key factor that contributes to economic growth depends on what factors are influencing its economy. These factors include government policies, supply of capital and consumer spending, exchange rates, technology, unemployment and international trade. In order for an economy to grow, these key factors should be kept in consideration.
The first and most obvious economic growth factor is that there is an increase in the Gross Domestic Product or GDP. This is defined as the sum of all the value added within a country's production in relation to the total value of all of its total outputs. The more the economy grows, the more productive it becomes and eventually the goods and services produced will be able to cover the needs and desires of all of its citizens. This is a very important factor because it determines the standard of living of a country.
Another factor that contributes to economic growth is the level of investment. This is determined by government policy, which includes the level of taxes, subsidies and other expenditures and the level of public sector investment. Other things that contribute to economic growth include the level of exports and imports and the level of foreign trade. The level of government bond debt and the interest rate on government debt are also a factor in determining economic growth.
Governmental policy plays a vital role in determining economic growth because it determines the amount of public spending and the extent of public infrastructure development. This is needed in order to stimulate the economy. It is necessary for the country to invest in certain sectors, for example, education and research and development. A key strategy is to ensure the long term sustainability of the economy.
The third key economic growth indicator is the condition of business institutions and the performance of businesses and the level of business activity. Changes in government policy are also a contributing factor to the changes in the condition of the economy. This is because the policy may affect the expansion or contraction of economic growth. In addition, changes in the financial system may lead to changes in lending rates, which are crucial in determining the condition of economic growth.
Economic growth depends on what factors are affecting the economy. These are the government policies and factors such as the structure of the economy, external factors and economic growth in the domestic market. External factors include international trade and capital flows. Domestic factors include consumer spending, investment and capacity utilization.