The main factors affecting the economy of a country

Similarly, Japan has a small geographical area and few natural resources, but achieves high growth rate due to its efficient human resource and advanced technology. A skilled, well-trained workforce is more productive and will produce a high-quality output that adds efficiency to an economy.

Factor Affecting GDP 6. For the global economy, it is key to monitor any sign that reforms are being accelerated and that resistance to change is being pushed backwards. All economically important activities are not bought and sold in market. Poverty and Economic Inequality: Of course, a country must balance the need for lower barriers to entry for entrepreneurs and new businesses with the need to protect its citizens through consumer safety and financial laws.

The Chinese government has many times, not least at the last meeting in Davos and at the Dalian summit, stated its ambition to push forward with reforms to open the economy and continue the transformation towards a well-functioning market economy.

Some environmental factors which contribute to a country's level of development, such as natural disasters, are beyond human control. Differentials in Interest Rates Interest rates, inflation and exchange rates are all highly correlated.

5 Factors that Affect the Economic Growth of a Country

Growth is increasing, lead by the recovery in the US and other advanced economies, but populism, geopolitical risks and market turmoil are likely to cast some shadows over the optimism. So far that has not been the case in the advanced economies. Such unpaid and un-priced services, no doubt, increase social welfare.

The economic and political consequences of a British move towards isolationism are devastating. Delivered twice a week, straight to your inbox.

Economic Factors Affecting Insurance Industry

The factors affecting GDP are: The education level of the workforce has improved. The Sumatra-Andaman earthquake Boxing Day tsunamiwhich caused over deaths and devastated many coastal regions of the Indian Ocean, was an example of a natural disaster which severely hindered the development of affected countries.

So far the response has been far from convincing. The traditional models that the Federal Reserve and other central banks are using to forecast inflation are backward-looking and are unlikely to capture the fast moving technological development that we are now seeing.

Therefore, in such a case, standard of living of people would not improve even when there is an increase in the total output of a country.

Increased internal globalisation, to use the term coined by Angela Merkel, is potentially a more diversified work force and a more creative economy. The following points highlight the six main factors affecting GDP.

Barriers to trade have been reduced.

Which economic factors most affect the demand for consumer goods?

Terms of Trade A ratio comparing export prices to import prices, the terms of trade is related to current accounts and the balance of payments. Higher interest rates generally mean tighter credit as well, making it more difficult for consumers to obtain the necessary financing for major purchases such as new cars.

Apart from this, it plays a vital role in stimulating government finances by enhancing tax revenues. Factor Affecting GDP 5. An example is unpaid housekeeping services. The explanation of finite non-renewable natural resources also tends to be overlooked in GDP.

As the population increases in size, the demand for consumer goods and services continues to increase, as does the national productivity rate. During the last half of the 20th century, the countries with low inflation included Japan, Germany and Switzerland, while the U.

This enables the government to earn extra income for the further development of an economy. In addition, Daesh will face a stronger counter insurgency efforts during Generally, the economic growth of a country is adversely affected when there is a sharp rise in the prices of goods and services.

Even though tariffs are often designed to protect local producers, they contradict the principles of the free market economy. The key factor deciding the degree of turbulence will be inflation in the US and reforms in China.

It will take time before we see the recovery of the super-cycle.Jun 30,  · Skip to main content.

What are the main factors that affect economic growth?

will give a boost to the economy by increasing a country's production capacity. (, June 30).

5 Factors that Affect the Economic Growth of a Country

Factors Affecting. Jun 30,  · Countries that recognize the importance of the four factors that affect economic growth will have higher growth rates and improved standards of living for their people.

Technological innovation and more education for workers will improve economic output which lead to a better living environment for everyone.

Aside from factors such as interest rates and inflation, the currency exchange rate is one of the most important determinants of a country's relative level of economic health. Exchange rates play a vital role in a country's level of trade, which is critical to most every free market economy in the world.

The eight factors that influences the value of a country ‘s exports and imports are as follows: i. The country’s inflation rate: If the country has a relatively high rate of inflation, domestic households and firms are likely to buy a significant number of imports.

Global factors affecting business The way of running the business differs from country to country. The marketing, sales and technical skills are required to increase the productivity of business.

The Main Economic Factors Affecting Insurance Industry The health of an economy is defined by various elements, which may encourage or hurt growth.

This article will outline some of the key economic factors affecting insurance industry.

Factors contributing to a country's level of development Download
The main factors affecting the economy of a country
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