Increase in the real output of goods and services over the specific time of a country is measure as its economic growth. The real economy, in the long run, is the concept where no limitations preventing the output level in different time spans. Long run growth is preferable because it sustains the increase in the growth of that country. When it comes to planning an economy of a nation, we consider all the factors which would contribute to its productivity even in the long run. The growth of an economy based on its inputs, capital and labour. The more input, the more growth. If we increase productivity, it will result in sustained increased growth in long run. Furthermore, increase in capital investments also leads to the higher level of growth in the count of the real economy of a country.
The factors determining the country’s productivity:
Capital, labour and other inputs used to make goods and services are known as factors of production. And these factors determine the productivity of that country.
It is stock for the production of new goods. It could be different. It can be an investment, tools for repairing, heavy machinery for the production of new products or the buildings. It is also an input for the production process which is last time produced as output.
- Human resources:
Abilities and knowledge are all we call human resource. Countries with highly educated and experienced workers tend to increase its productivity more rapidly.
- Natural resources:
These are renewable and non-renewable resources. This includes minerals, rivers, forests, reserves of coal and petrol.
Modern and technical ways to increase growth. A technology with limited applicability are less useful for the increase in growth. More adapted to technology more chances for growth.