Economic Growth
Written By : Fida Karim
Economy is concerned with production, distribution and consumption of goods and services by people living in a particular area. Economy is the cumulative results of the way people live and it is how they make the things they want and decides who gets what and when. Here we will look at why Economy is important for a country or citizens of a country?
The Economy of a country tells us about the well being of its citizens. Therefore economic growth is an important component of all economic policies. The growth in an economy tends to increase job opportunities and helps in improving quality of life. Economic growth raises the living standard of people, increase the consumptions of goods and services and increase the savings and investment in a country. Thus economic growth is considered a key component for economic development.
What is an Economic Growth?
Economic Growth is an increase in the production of goods and services over a specific period of time. Economic growth is measured by the increase in National output or in more specific terms it is an increase in the Gross domestic product.
Factors needed for Economic Growth:
a) Human Resource or Human Capital:
One of the important factor for economic growth is human capital. The quantity and quality of human resource directly affects the growth in an economy. The quality of human capital depends on the skills, creative abilities, training and education. These factors directly affect the growth in an economy I.e. the more the human capital the more will be the growth and vice versa.
b) Natural Resources:
Natural resources includes all those resources which are used in production as raw materials or which are directly consumed. These include all those resources which help to boost the economy and help in economic growth. Natural resources can be either on land or beneath the land. The resources on land include plants, water and fertile land. The resources beneath the land include oil, minerals, natural gas, metals, and non-metals. The effective use of natural resources depends on the quality of human capital, skills and technology.
c) Technological development:
Technology involves the application of scientific methods and theories in production. Effective use of technology helps to achieve the desired level of output with reducing the cost and maximizing revenues. Technological development helps to increase the productivity with limited available resources. Countries with enhanced technology have progressed over the years and the economies have shown a positive growth trend.
d) Political stability:
Political stability and economic growth are deeply interconnected. Political stability provides peaceful environment for investors, help in promoting tourism and Increases foreign direct investment. On the other hand uncertainty associated with unstable political environment reduces investment and also reduces the pace of economic development.
Current Situation:
The ruling party came to the power with the promise to build Naya Pakistan (New Pakistan) by giving a new system and making structural changes in the economy. The structural changes include empowering youth, providing jobs, building affordable houses and by reducing poverty. However in the very first year of PTI government the economy faces serious external and internal problems. Both these problem slow down economy and growth rate decreases to 3.3 percent in 2019 from 5.8 percent in 2018.The World Bank forecast for the growth in 2020 is 2.7 percent.
In order to achieve the targets and to have a sustainable economic growth the government should consider the following things:
Firstly the government should look for all opportunities to increase the revenues. This include introducing tax reforms and also to increase direct taxes. Secondly the economy should be converted from consumption-driven growth model to export oriented growth. The government should also provide safe environment for the investors so that foreign investment will promote the economic growth.
Without these measures the country would not have a sustainable economic growth and we might face another crisis in future.
