Factors That Affect The Economic Growth

1. Introduction
In the world there are underdeveloped countries, developing countries and developed
countries. Developed countries like U.S.A, Japan, West Europe countries, and Ausrtralia can
enjoy the high standard of living and always developed. On the other hand, the
underdeveloped countries have not and difficult to developed. What is the reason? The
reason is the economic growth. It is becoming important problem for a country. And then,
what is the economic growth?
The economic growth has more than one definition, each economist makes their
definition of economic growth. Sadono rightly points out that the continously increase of
output per capita in a long term is the definition of economic growth(1996:33). The other
economist, Kuznets argued that the definition of econonomic growth is the long term ability
of a country to provides the economic goods for its citizen (2000). There are economists
definition of economic growth, from their statements, the economic is growing or developing
if the output per capita and economic goods had been increased. So, we conclude that the
economic growth is the increase of Gross National Product and output real development.
High economic growth of a country, means that its welfare is high. Economic Growth
certainly has some influential factors. What are They?
2. Body
2.1.Natural Resources
Economic growth of one country and another is different. Some are high and the
others are low. There are some factors that affect economic growth of a country.
Natural resources of a country are including land, climate, season, weather, sea and
forest products, and mining products. They have a big contribution to develop the economic
growth. In a country where the economic growth process is started to grow, there are many
problems to overcome. They are shortage of labors and capitals, lack of knowledge to
develop the economy, and limited market for economic activities because of low individual
income.
In other hand, the problems above can be solved if a country has the natural resources
which can utilized and benefical or transform them into an attractive sectors for investors. If
that are the case, the investors from developed countries will invest and transform that sectors
into a business sectors. Adequate of capital, technology, modern tech of production, and the
experts and engineers that were brought by the investors allowing natural resources to be

processed efficiently. As a result, the products of such processing can enable the export
activities. Mining industry inside is becoming the motor to mobilize economic growth rate.
The real evidence of that are the petroleum industry in Brunei and Middle East and gold
mining industry in South Africa. They provide big contribution in developing the economic
growth. It is in line with one of the economists opinion. Sadono points out that in develop
the economic growth of a country, the natural resources can make the work easier (1996:429).
2.2.The Number and Quality of Population and Labor
The Population that always increase may be driving or inhibiting of economic growth.
That will increase the number of labors and allows the country to increases production.
Education, training and work experience are required in this condition. As a result, skill of the
population will increase, and then that will increases productivity of a country. We must
remember that entrepreneurs are part of population. The extent of economic activity of a
country also depends on the entrepreneurs. So, more entrepreneurs in the population, there
are more economic activity can be done.
According to Meier, population growth also has bad effect in economic growth.
Especially in a society that has a high population but low economic progress. If the
population is not balanced with the available factors of production resulting in marginal
productivity is low and then the national production will not occurs or runs very slow
(2005:205).
If the situation in which the number of labor can not increase the national production
occurs a country, the income per capita will decline. Thus the excessive population growth
will lead to degenerate the prosperity of a country.
2.3.Capitals Goods and Level of Technology
Capitals goods are goods that used to production activity. They are like farming tools,
hunting tools, fishing equipments, and carpentry tools.They are important to develop the
economic growth rate. In a poor society, capital goods also have an important role in
sustaining economic activity. They will have difficulty in obtaining their daily needs.
Now, we have entered the modern era and we can not escape from technological
development. Then all the economic aspects have been growing rapidly. If only the capital
goods are increased while the level of technology did not develop, the progress will be
difficult to be achieve. A country not only needs capital goods to grow the economy, but also
the modern technology should be there. Technological advances lead to discoveries of new
goods that have not been produced before and improve the productivity. As a result, the
production costs are low and production quantities are increasing. In other hand without

development of technology, the productivity will not change and still remain at the lowest
level. Therefor, income per capita is only growth sightly and the economic growth will be
stagnated.
2.4.Social System and Society Atitudes
Social system and society atitudes can be inhibiting the economic growth. The
traditional customs are still able to inhibit the public to use modern production technology.
Society atitudes also can help the economic growth, they are saving money for investment,
hard worker, and another atitudes that support the economic activity.
If there are some attitudes in social system and society atitudes that greatly impede the
economic growth, governments must work to remove that. The first step to anticipate that are
improving educational facilities and improving public education.
3. Conclusion
Above are influential factors in economic growth and its explanation. In conclusion,
the influential factors of economic growth can be grouped into two. Beginning process and
advanced. The members of beginning process group are Natural resources and social system
and society atitudes. Then for advanced group are the number and quality of population and
labor and capital goods and level of technology. These factors must be looked for advantages
and disadvantages so the economic growth increase without difficult obstruction. And then
the properity can be realized.

References
1. Ahmad,

R.

(2010).

Definition

of

http://www.elasq.wordpress.com.
2. Kuznets.(2000). Economic Growth.

Economic
[Word

Growth.

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from

document].

Retrived

from

www.scribd.com. Long term ability of a country to provides the economic goods for
the citizen is the economic growth for me.

3. Sukirno, S. (1996). Makroekonomi. Jakarta:Rajawali Pers.

Page 33. pertumbuhan ekonomi ialah kenaikan output perkapita yang berlangsung
secara terus menerus dalam jangka panjang.
Page 429. Kekayaan alam akan dapat mempermudah usaha untuk mengembangkan
perekonomian suatu negara.
4. Eachern, M. (2000). Macroeconomic.Jakarta:Salemba Empat
Page 401. Bad consequences of population growth to economic growth, especially
faced by society that has a low economic level with a high population growth. A
country is said to have the problem of population explotion if the population is not
balanced by the available factors of production. As a result, the marginal productivity
of the population is low. This means that the addition of labor does not cause the
increase of national production, or if increased, the rate is very small and can not
compensate for population growth.