Economic Factors And Economic Growth Essay

The Relationship between Economic Factors and Economic Growth: An Empirical Investigation.

Introduction:

Economic growth is defined as the increase in the capacity of an economy to produce goods and services compared from one period of time to another. Economic growth is the continuous improvement in the capacity to satisfy the demand for goods and services, resulting for increased production scale and improved productivity. (Sources of Economic Growth, 2011). The economic growth of a country is associated in rising incomes, related increase in saving, consumption and investment. The change in the economic growth occurs due to the change in economic, political and social factors. Whereas economic factors consist of inflation, gross domestic product, consumer price index, employment rate, domestic and foreign investment, trade openness, exports, imports etc. (Axthur A. J., 1964)

Economic growth leads to the reduction in poverty. Without economic growth it is impossible to make any meaningful and sustained reduction in poverty. It also helps to reduce unemployment. When there is stagnant economy there is high rate of unemployment. (Cheng and Huang ,

Therefore, economic growth was a long-term process in which substantial and sustained rise in real national income, total population and real per capita income took place (Kuznets, 1971). The economic growth was a continuous phenomenon by which the productive ability of the country increased over the long period of time. (Todaro and Smith, 2004). The poor economic growth of Pakistan was due to high inflation rate, rising foreign debt and debt servicing, less exports, backwardness of human capital, political unrest, and a bad law and order condition in the country (Iqbal and Zahid ,