Examine the factors which explain the differences between economic

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Examine the factors which explain the differences between economic growth rates in countries. Economic growth is the long term increase in productive capacity as shown by an outward shift on a PPF curve. The PPF shows the maximum potential output of the economy. Productive capacity is an economies ability to produce goods and services, so if an economy grows, it can produce more goods and services for the population of the economy to use. Differences in Economic growth in countries result due to many factors, such as land and its resources. The amount of land a country possesses, and all the natural resources it finds on the land can affect the amount of output. For example, Saudi Arabia has experienced very high growth…show more content…
The problem is that they are expensive to make. Another way that technology increases economic growth is that it creates new products for the market. People will spend income on new products, but without new products there will be less spending, so there would less or no economic growth. So overall, a difference in technological progress between countries will produce different rates in economic growth. The quality of resources, notably labour, has a dramatic affect on economic growth rates in countries. Many economists believe that education and training is the most important factor in determining economic growth rates. Some countries like Germany concentrate on training their current workforce to increase productivity, whilst others such as the USA, focus on educating children and teenagers. The USA boasts the highest percentage of 18-24 year olds in full-time education, and experiences high growth rates. China, one of the fastest growing countries, also concentrates strongly on educating people at a young age. Another factor influencing growth is the significance of international trade. In countries that don’t participate in international trade, such as , there is very slow or no economic growth. This is because it is very hard for one economy to produce all goods which people require. It is better to specialise in a few goods, use them, sell the
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