Six Factors Of Economic Growth

Economic growth is defined as. an increase in an economy’s production capacity or potential GDP. The rate of economic growth is the key determinant of. changes in a society’s standard of living—which is commonly measured using real GDP per capita.

The factors that contribute to economic growth are increased quantity and quality of labor, natural resources, physical capital, and technological advances.

• Natural Resources. The discovery of more natural resources like oil, or mineral deposits may boost economic growth as this shifts or increases the country’s Production Possibility Curve.
• Physical Capital or Infrastructure.
• Population or Labor.
• Human Capital.
• Technology.
• Law.

Some of the major non-economic factors with a significant impact on economic growth and social development are: culture, religion, the role of family, class, tradition, role of the individual, social and political dependence, the role of government, religion, language as a resource of human capital, corruption, factors …

Economic environment

• Employment/unemployment.
• Income.
• Inflation.
• Interest rates.
• Tax rates.
• Currency exchange rate.
• Saving rates.
• Consumer confidence levels.

Let’s have a closer look at the main economic factors that affect business success.

• Consumer confidence. Consumer confidence measures the overall consumer optimism about the state of economy.
• Economic growth and development.
• Inflation.
• Interest rates.
• Unemployment.

The economic environment refers to all the economic factors that affect commercial and consumer behavior. The economic environment consists of different things for different people. For example, for a farmer, the weather and price of fertilizers are important factors.

The economy includes all activities in a country concerned with the manufacturing, distribution and the use of goods and services. The economic climate has a big impact on businesses. The level of consumer spending affects prices, investment decisions and the number of workers that businesses employ.

The social environment of a business can also have an impact on the type and number of customers it attracts. In a business environment where employees are generally positive, upbeat and cooperative, customers are more likely to appreciate the atmosphere they experience when interacting with employees.

Factors in the social environment that are important to health include those related to safety, violence, and social disorder in general, and more specific factors related to the type, quality, and stability of social connections, including social participation, social cohesion, social capital, and the collective …

Composition of family is an example of social environment. Social environment consists of the customs and traditions of the society in which business is existing. It includes the standard of living, taste, preference and education level of people living in the society where business exists.

The external business environment consists of economic, political and legal, demographic, social, competitive, global, and technological sectors. Managers must understand how the environment is changing and the impact of those changes on the business.

The International business environment includes various factors like social, political, regulatory, cultural, legal and technological factors that surround a business entity in various sovereign nations. There are exogenous factors relative to the home environment of the organization in the international environment.

As we mentioned above, a marketing environment is typically broken into internal and external factors. Internal environments are in-house aspects under an organization’s control. External environments are outside of a business’s control but can and do affect how a business functions.

Internal influences on operational objectives

• Corporate objectives. As with all the functional areas, corporate objectives are the most important internal influence.
• Finance.
• Human resources.
• Marketing issues.
• Economic environment.
• Competitor efficiency flexibility.
• Technological change.
• Legal & environmental change.

What are external influences?

• political.
• economic.
• social.
• technological.
• environmental.
• competitive.