Drivers of High Economic Growth

Abstract

Over the past few decades, economists' interest in the factors influencing economic growth has grown. What drives economic expansion? Why do some nations expand more quickly than others? What are the causes of inequitable nation-growth? The literature that attempts to investigate the factors that contribute to economic growth has exploded as a result of these problems and the resurgence of research in economic growth. Every country now views economic growth as a desirable fruit, and economists place great emphasis on the idea of economic growth for the following reasons: First, stronger economic growth promotes human welfare on its own (Aghion et al., 2010). Second, economic expansion boosts the nation's capacity to produce goods and services (Rittenberg et al., 2012). Third, increased employment possibilities and labour productivity contribute to lower levels of poverty, the most prominent issue facing developing nations (Melamed et al., 2011). Fourth, it enhances quality of life through the lens of human development by emphasising enhanced conditions for education and health (Ranis et al., 2000). Fifth, it improves people's quality of life by giving them access to more commodities and services (Grant, 2014). Sixth, faster economic growth generates more tax income for the government, which can be utilised to provide poor people with more basic services (Booth et al., 2016). Seventh, it results in more effective use of limited natural resources (Stiglitz, 1974). Eighth, it promotes the growth of socioeconomic infrastructure, raising people's standards of living and assisting in quickening the rate of economic growth (Canning et al., 2004). Ninth, it eventually lessens income inequality. According to the Kuznets hypothesis, income disparity tends to develop during the early stages of growth but tends to reduce during a later stage of expansion (Aghion et al., 2010). Tenth, faster economic growth leads to the creation of a stable financial system because demand for better and more effective financial services rises as economic growth rates rise (Patrick, 1966).