The determinants of economic growth and impact of globalization are essential elements in monitoring the economic development process. The economy refers to a country’s state in terms of money supply, level of production, and consumption. There exist various determinants of economic growth include the following. The accumulation of capital stock is a crucial element in determining the growth of the economy. It refers to the broad measure of available physical capital a country has. Secondly, an increase in labor in terms of workers and working hours is equated to economic growth. Thirdly, the rate of technological advancement is useful in measuring whether an economy is improving or not. Having knowledge of these determinants, understanding the policies for economic stabilization and growth is essential.
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ANALYZING THE IMPACT OF GLOBALIZATION ON ECONOMIC DEVELOPMENT
Globalization refers to the process by which organizations and businesses venture into international boundaries. International expansion is beneficial to both the business and the economy. The impact of globalization depicts itself in economic development in the following ways. One is through the foreign direct investment that boosts the overall growth of international companies. Secondly, globalization facilities technological innovations that enhance the economy by improving the efficiency of processes. Additionally, economies of scale arise from globalization hence reduce prices of goods. This facilitates economic growth by increasing consumption rates. Therefore, outlining the determinants of economic growth is essential for promoting economic development and globalization altogether.
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THE POLICIES FOR ECONOMIC STABILISATION AND GROWTH
Economic growth and stabilization are crucial for several reasons. These include price stabilization, creation of employment, and balance of payments. Moreover, it increases investment levels through the assurance of the return on investment to the investors. As a result, analyzing the determinants of economic growth is crucial. After comprehending the determinants, creating policies that facilitate the continued growth of the economy is necessary. These policies may either be short term or long term depending on the goal for achievement set. The policies for economic stabilization and growth are classified into two. The policies for facilitating stabilization are fiscal stabilizers, floating exchange rates, monetary markets, and flexible labor markets. The ones for enhancing sustainability in growth include technological policies, developing human capital, and deregulation policies.
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