There are many factors that limit economic growth. Some of these are quite troublesome to those who wish for more economic growth. For example, a country with high levels of taxation will not see as much economic growth. On the other hand, if a country has low levels of taxation and economic freedom, it will flourish. Therefore, the factors that limit economic growth must be kept in mind and understood before taking any steps that may affect them.
One of the most significant factors that limit economic growth is political stability. Many factors contribute to political instability. For instance, an unstable political system with multiple parties that compete for power can lead to economic hardships. Another factor that leads to political instability is the lack of investment capital. If a country lacks investment capital, there will be less investment capital available to smaller businesses and the smaller businesses will not have enough capital to develop new products or expand their business. This will prevent economic growth from being achieved.
Another factor that limits economic growth is the level of education and healthcare available to an individual or a society as a whole. Education and healthcare play a crucial role in maintaining a healthy economy. Without education and healthcare, an economy cannot prosper. As mentioned above, political stability is another important factor that leads to economic hardships in a country. Without political stability, crime rates will increase due to lack of law and order and economic growth will be inhibited. This means that there will be limited access to basic necessities such as food and fuel.
When there are high levels of taxation and low levels of investment capital, unemployment and inflation are likely to be present. This means that economic growth will be slow. This is a major factor that limits economic growth. One way to avoid this is to eliminate barriers that exist in the country such as corruption. By removing barriers to economic growth, more capital will be generated which will result in jobs.
Economic policies that are implemented by the government are also one of the factors that limit economic growth. In many cases, the implementation of bad economic policies such as inflation and excessive fiscal spending by the government will result in slower economic growth. Another factor that limits economic growth is the political situation of the country. When the ruling party is in power, the economy will surely be sluggish because of the high amount of taxes that will be required.
Although growth is limited, it does not mean that there is no scope for economic development. The key to a thriving economy is good management of resources and effective utilization of the same. Proper utilization of the natural resources such as capital, labor, and technology is also . . . . . . another factor that limits economic growth.