Four Factors of Economic Growth

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Four Factors of Economic Growth
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What do they have in common?
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How is Economic Growth Measured?

• Economic growth in a country is measured by the
  countrys Gross Domestic Product (GDP) in one
  year

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Gross Domestic Product

• GDP is the total value of all the goods and
  services produced in that country in one year
• Tells how rich or poor a country is
• Shows if the countrys economy is getting better
  or worse
• The raising of a countrys GDP, the better the
  countrys standard of living.

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Standard of Living

• Standard of living- The quality of life of the
  people within a country
• The higher a countrys GDP, the better quality of
  life standard living increases

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World Mapper

• World Mapper

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Standard of Living

• In order for a country to have an increasing GDP,
  it must invest in human capital through education
  training, and it must produce goods that have
  value to be sold within the country or exported.

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4 Factors of Economic Growth

• There are four factors that determine a countrys
  Gross Domestic Product for the year
• Natural Resources
• Human Capital
• Capital Goods
• Entrepreneurship

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Natural Resources

• Gifts of Nature
• Without them, countries must import the resources
  they needand this is costly!

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Natural Resources

• Countries that have a lot of natural resources
  are able to use them to produce goods services
  cheaper than a country that has to import natural
  resources
• Many natural resources? Trade them with other
  countries and make money for the economy!

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Human Resources/Human Capital

• Value that humans bring to the marketplace
  education, training, skills, and healthcare of
  the workers and the value that they bring to the
  countrys economy
• Examples computer/reading/writing/math skills,
  talents in music/sports/acting, ability to follow
  directions, ability to serve as group leader
  cooperate with group members
• A countrys literacy rate impacts human capital
• the percent of the population over 15 that can
  read/write

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Why invest in developing human capital/human
resources?

• Countries will have a more valuable workforce
  that produces more goods services.
• People that have training are more likely to
  contribute to technological advances, which leads
  to finding better uses of natural resources
  producing more goods

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Capital Goods

• Capital goods are all of the factories, machines,
  technologies, buildings, and property needed by
  businesses to operate.
• Examples tools, equipment, factories,
  technology, computers, lumber, machinery, etc.

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Why invest in developing capital goods?

• More capital goods the more goods services
  they are able to produce the more money they
  can make!

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The Role of Entrepreneurship

• People who take the risk to start and operate a
  business are called entrepreneurs
• These people risk their own money and time
  because they believe their business ideas will
  make a profit
• Entrepreneurs must organize their businesses well
  for them to be successful
• They bring together natural, human, and capital
  resources to produce goods or services to be
  provided by their businesses

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How does Entrepreneurship Influence Economic
Growth?

• Entrepreneurship creates jobs and lessens
  unemployment
• Encourages people to take risks, and in doing so,
  they create better healthcare, education,
  welfare programs
• The more entrepreneurs a country has, the higher
  the countrys GDP will be

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Lets Review

• Obertopia GDP