2.5.1: Causes of Growth

• For economic growth to occur there must be an increase in one of the factors of production
• Land may cause economic growth due to discovering new resources such as oil. This has a higher effect in developing countries
• An increase in the quality or quantity of the labour force will improve economic growth. This can be done through education or raising the retirement age
• If a country receives a lot of investment, they will be able to build new capital and be able to produce more goods and services, increasing growth
• If the government offers grants and tax benefits, development of business is encouraged, creating more jobs and causing greater production of goods and services, therefore increasing growth
• Factors that increase economic growth

  Increase in Land, Labour, Capital or Entrepreneurship

  Technology improving

  High efficiency
• Actual Growth: Percentage change in GDP
• Potential growth: Change in productive potential of the economy over time