Components of Economic Growth Prem Vijoy Assistant Professor

Components of Economic Growth Prem Vijoy, Assistant Professor, Deptt. Of Economics, G D College, Begusarai.

Generally, we discuss about economic growth and economic development simultaneously but economic growth and economic development are different things not only in its meaning but also in its approach and components. Economic growth is very important because it is related to positive economics and it is a real scientific thing which can be achieved through different available methods. Today we talk about Different Components of Economic Growth. . . .

Components of Economic Growth There are three components of economic growth Viz. • Capital accumulation it includes new investment in land, physical equipment and human resources, • Growth in population it leads labour force, to the growth of • Technological progress It is new ways of accomplishing task.

Capital accumulation It results when some proportion of present income is saved and invested in order to augment future output and income. New factories, machinery, equipment, and materials increase the physical capital stock of a nation and make it possible for expanded output levels to be achieved. These directly productive investments are supplemented by investment in what is known as social and economic infrastructure - roads, electricity, water and sanitation, Communications and the like which facilitates and integrates economic activities.

Capital accumulation Investment may be in A) Physical Capital B) Human Resources & may leads towards 1) Creation of new stock or 2) Merit/Quality improvement of erstwhile Stock.

Population and Labour Force Growth Population growth, and associated eventual increase in the labour force has traditionally been considered a positive factor in stimulating economic growth. A large labour force means more productive workers, and a large overall population increases the potential size of domestic market.

Technological Progress It results from new and improved ways of accomplishing traditional tasks such as growing crops, making clothing, or building a house.

Technological Progress. . . 1 Three type- 1)Neutral Technological Progress It occurs when higher output levels are achieved with the same quantity and combinations of factor inputs.

Technological Progress. . . 1

Technological Progress. . . 2 Three type-continue……. 2) Capital Intensive/deepening- It occurs when higher output levels are achieved with the same quantity of Labour but increased quantity of capital.

Technological Progress. . . 2

Technological Progress. . . 3 Three type-…continue 2) Labour Extensive- It occurs when higher output levels are achieved with the same quantity of capital but increased quantity of labour.

Technological Progress. . . 3

Conclusion The sources of economic progress can be traced to a variety of factors, but by and large, investments that improve the quality of existing physical and human resources, increase the quantity of these same productive resources and raise the productivity of all or specific resources through invention, innovation and technological progress have been and will continue to be primary factors in stimulating economic growth in any society.

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