Examine the factors which explain the differences between economic Essa

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 rates due to the richly endowed lands which contain much oil. In this developing economy, the oil exploitation was vital for its growth. Some 3rd world countries are so poor, and lack such growth as Saudi Arabia, because they have insufficient land, or insufficient resources to produce goods and have a higher output, and therefore have a higher economic growth. Another supply side factor determining the growth rate of countries is labour, i.e. the number of workers in an economy. More workers mean more output, so should lead to economic growth. Growth rates in different countries may differ due to population differences, as an economy with a higher population, will have a larger workforce. Some countries have immigration laws which can help increase economic growth. For example, an economy can employ migrant labour, by allowing migrants into the country only if they are educated, and in a position to work. This includes only letting younger people into the country, so that there are... ..., 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 surplus, and use the money to buy other goods from other economies, rather than the economy to produce everything itself, which is very inefficient. In this country, there is a much slower rate of economic growth compared to other countries. So altogether, there are many factors influencing economic growth, and this leads to different growth rates in different countries.