Economic growth is nothing but GDP increase that refers to the combined value of products and services a country produces annually. So, obviously economic growth is dependent on multiple factors. At the same time, recession is also a reality which is triggered by geo-financial and geopolitical events. To achieve an optimum growth, you must look at ways in which the economy grows and who makes this growth possible. For instance economic growth in the US is usually driven by business investments and consumer spending.
Ways to boost economic growth:
- Tax cuts/Tax rebates: This is one of the best ways to hand over money to consumers. When this happens, the consumer will spend part of this money in different businesses. This, in turn, will increase a company’s revenues, profits, and cash flow. With more cash businesses can acquire more capital and invest in technologies to grow further. These developments boost productivity which helps the economy to flourish.
- Deregulation: This involves relaxing regulations/rules imposed on businesses. This had been adopted during the Reagan administration in the eighties when financial institutions were beneficiaries. Economists have credited the striking economic growth at this time to this move. Those who want deregulation believe that strict laws can constrain businesses and curb their freedom to grow. As a result, both recruitment and production are affected and GDP suffers.
- Infrastructure use: Infrastructure spending happens when federal or state governments spend money for repairing or constructing new facilities for commerce. This includes building bridges, roads, ports, etc which can boost business operations. Moreover, infrastructure spending will create more work opportunities for the people leading to further economic growth.
How can you sustain economic growth?
In spite of spectacular growth, the world faces a big dilemma. Although growth is desirable it has had serious consequences for the environment. How can one sustain this growth then?
- To start with, countries must take steps to modernize their retail sectors, improve healthcare efficiency, reduce food-processing wastage, etc. Efforts have to be made to develop new seeds for boosting agricultural yields, using new materials like carbon-fiber composites for manufacturing airplanes and cars, and digitalizing medical records.
- Serious steps must be taken to boost women’s productivity; this is because only about a half of their total working-age population is employed. Increasing women’s participation in the labour force can contribute significantly. So, governments and employers need to do away with discrimination in hiring, promotion, and retention of women workers. They must introduce family support and friendly tax policies to allow workers to balance their work and home responsibilities easily.
- To mitigate impact on environment because of accelerated and continuous economic growth activities, the world as a whole needs to boost resource efficiency. It is necessary to identify ecologically-responsible growth avenues through smart resource use. Improvements must be made in energy efficiency which will help in job creation and economy growth. Improving resource productivity will lead to savings; policies backing this goal are being adopted by developed and developing nations alike.