Various Ways How Economic Growth is Stimulated

  • Various Ways How Economic Growth is Stimulated

    The growth of economy is being measured by the increase of GDP or its Gross Domestic Product. It is defined as the value of all services and goods produced (combined) in a given year. There are several aspects that do contribute to the growth of an economy such as businesses similar to, casinos and everything in between.

    On the other hand, you have to know that there’s no single factor that spurs consistently the ideal or the perfect amount of growth that is needed by an economy. The sad thing is, recessions are fact of life and it could be caused by a number of exogenous factors similar to geo-financial and geopolitical events.

    From economists, world leaders and politicians, all of which have debated widely the best growth rate and at the same time, on how this can be achieved. It is vitally important to know how economy is growing. Meaning to say, figuring out who or what are the participants that are making the economy to keep moving forward. In the US for example, the growth of its economy is primarily driven by consumer spending as well as business investment.

    Therefore, if consumers are in the market buying for new homes, for instance contractors, construction workers and home builders will enjoy economic growth. Businesses at the same time help in driving the economy when it has to hire workers, reinvest to grow their business and raise wages. A company that is buying new manufacturing plant or investing in new innovations can help in creating new jobs which then results to economic growth.

    There are several other factors that can promote economic growth of course aside from business investing and consumer spending and these will be tackled below.

    Tax Cuts and Tax Rebates

    These are strategically designed in putting more money back to the consumer’s pockets. Preferably, consumers will be spending a portion of their money at certain businesses to which boosts their revenues, profits and cash flows. Having more cash indicates that companies will have the necessary resources in procuring capital, grow, expand and improve technology.

    Utilizing Infrastructure in Spurring Economic Growth

    Infrastructure spending takes place whenever a federal, state or local government spends cash to repair or build physical facilities and structures that are needed for the society and commerce. Infrastructure can be anything but not limited to ports, sewer systems, roads and bridges.

    Economists who are in favor of infrastructure spending as economic catalyst arguing that having the best infrastructure boosts productivity by means of enabling businesses to function as efficient as it could be.

To Top