What Factors Affect World Economic Growth?

World economic growth refers to an analysis of the factors that contribute to or negate the growth of the economy from a global perspective. There are many contributing factors to the growth or lack of growth of world economies, including education, politics, health and transportation. All of these factors affect global economic growth in some manner.

One the chief factors that affect world economic growth is human capital in the form of education. The value of education toward achieving a more contributory rate of world economic growth from the various countries in the world can be seen through an analysis of the rate of economic growth in countries with a large percentage of highly educated people, as opposed to a country with less. Education is considered a part of human capital because a solid education normally yields returns in the form of the application of the education toward activities that help in the development of the economy. People with education are often more likely to apply their skills toward the development of entrepreneurial ideas that will lead toward the establishment of specialized companies. These companies serve useful purposes, such as the establishment of subsidiaries in other countries, employment of people from different countries, payment of taxes, and a general promotion of world economic growth.

Political stability is vital for world economic growth, because when several countries are experiencing political turmoil the revenue that would have accrued from those countries would be lost. For instance, if a country has a wealth of natural resources it cannot use due to political strife, the world economy would feel the impact in terms of the loss of employment from those industries and in the revenue that would have been realized from the sale of resources on the local and international market. The country would also be a drain on other countries due to the burden the citizens of that country will place on them as a consequence of the assistance and other forms of financial and material aid they will require.

Another important factor that affects world economic growth is health, which is another component of human capital due to the fact that any investment in the health of an individual will yield an expectation of better health and more productivity. The diseases in some countries affect the growth of their economy due to the higher incidences of mortality in such places as well as the loss of manpower. A good transportation network, which is a product of sound infrastructural management, also contributes to economic growth.