Physical Capital

Every nation, state, country wants to improve its market value of the goods and services that it provides. The economic growth of a region is the outward shift in the Production Possibility Curve (PPC). The economic growth of a region is measured by its total Gross Domestic Product (GDP) and other times with Gross National Product (GNP). Economic growth is considered an essential factor to determine the health of an economy. Good economic growth brings employment and automatically improves the standard of living. Here are six factors affecting economic growth.

Natural resources

An abundance of natural resources can help an economy by sharing the resources with industries with high requirements. Mineral deposits or oil can easily boost economic growth as it improves the PPC of the country. Other natural resources like land, forests, water, and natural gas are also important. Every region should take measures to conserve its natural resources and balance its supply and demand.

Physical Capital

Physical Capital

Factories, machines, roads, tools, etc., are the physical capital that requires investments to lower economic activity costs. Machines are getting better and more productive than physical labor. Higher productivity will increase the output that will increase the GDP for a county or a region. A robust highway will also allow the country to distribute its raw materials and goods around the country more easily.


With the growing population, the availability of workers will also increase. With the availability of workers, a region can have a higher workforce. However, higher popularity can soon become a population to the economic growth due to unemployment.

Human capital

With an investment in human capital, a county or state can expect improvement in the labor force quality. With an improvement in skills, training, and learning, a region can generate a skilled labor force. Making investments in people at an early stage, such as a high school, will help them become worthy of higher-skilled jobs, also improving their salary.



Technology has become an important factor in revolutionizing the economic growth for several regions around the world. Today, with the help of technology, several regions are experiencing increased productivity with the same levels of labor. It accelerates the growth and development of a region at lower costs. Factories that use the latest technology are bound to sustain long-term growth.


The institutional framework for a region that regulates all the economic activities also plays a major role in economic development. The rule and laws that limit the freedom of estabilishing any type of factory or technology may prevent the opportunities that help in the economic growth. Since there are no specific set of institutions for growth, every county, state, and country should keep implementing new regulations in their framework. Without the scope of changes, the economic growth of a region can limit itself, while the regions that allow the changes will flourish.

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