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“Guys. So let s now take a look at what we ve got with long long term sources of growth. So how can economy continue to actually grow and develop you ve got to turn to the supply side in developing supply side policies. Which is going to be really important here now firstly.
Let s just get to grips with a couple of key terms to really understand what we re talking about first up factor endowment. Really important term when it comes to economic development. And it refers to the land labor capital and enterprise within. Economy.
Now some countries are naturally blessed with certain factor endowments. We consider for instance singapore. They don t have any natural resources. But what they do have is access of course to the straits of malacca and a deepwater port.
And that was one of the key founding principles within singapore s economic development that they were able to actually base themselves as a trading nation..
So you can use certain factor endowments. Within an economy to help you actually start that development process. But it s so important that you actually evolve initially most countries will certainly follow a extensive model of growth and this extensive modeling growth is simply an expansion of inputs ie. The land labor capital men s price.
That s actually being utilized to increase output. So it really is just a matter of throwing resources and it s you to actually increase output. But eventually of course you ll run out of available resources. Now.
When that happens of course economic growth will slow and then you need to turn towards more intensive methods of economic growth. So intensive growth is really about increasing efficiency and increasing productivity. Within. Which you actually utilize those factors of production.
So increased productivity will help to therefore raise output..
So let s think about each of these areas in term that we so land well. We know some countries do have natural resources that they re able to export now that can be both blessing and the cursors we see but countries must make sure they do focus on efficiency and productivity. And that they use export revenues to diversify diversify their export sector and their economy. Now when it comes through by utilizing land much better look at singapore.
What they do there with hot within hong kong. As well you have many high rise buildings of course. Why is that the case well of course. It s a more efficient more effective use of that available land and that means that the actual density of the city can actually increase.
So that s a really important point. If you consider london as a further example you ll see that we don t have that same development of high rise buildings within london as we do see within singapore and hong kong. And that means. We don t have as efficient a use of land.
And that perhaps can of course drive up property prices and so on..
But it s also about fertilization methods to ensure again that whatever you re farming is is being fond as efficiently and productively as it possibly can be when it comes to your labor. You need to develop the actual human capital of your labor. So that your labor force has more productive potential and this may well involve training and necessary retraining when a comparative advantage begins to actually dissipate and fade away so as such you need to make sure that you really keep up to date and keep your labor force being trained in the skills that are going to be needed by the economy in the future. And it can be difficult to actually determine what those skills will be but certainly.
It s something that industries. And that the labor force will want to work towards because otherwise they ll find themselves. Structurally unemployed and of course that is inefficient. Then we ve got capital so when it comes to cap.
This also includes technology as well so you want to make sure that you ve got a good capital goods base. So that there s a lot of investment in capital capital goods and capital infrastructure. You have good roads railways and airports to make sure that your transportation is easy as possible and that again will help the supply side of the economy. But in addition to that if we re talking about increased productivity.
We need excellent capital goods and of course technology s component part of that then we ve got enterprising the entrepreneurial climate within an economy and if you develop a more entrepreneurial climate..
It can firstly help to eliminate poverty even in the poorest types of country moreover. It can also help to develop more cutting edge businesses. Which will help to facilitate improved economic growth of that given country and then finally we ve got institutional factors so institutional factors just going back to singapore. Again they ve kept their government.
They re relatively small and they ve kept them very very clean. There is no corruption when it comes to actually starting a business in singapore or hong kong. It s a very very easy process you compare that with the actual implications and setting up and starting your own business in other countries. Such as the likes of tanzania and it can actually take months.
So there can be a number of factors that can really help develop entrepreneurialism within an economy. You also want to have a very good banking system of course if you have a good banking system that s going to help develop allocated efficiency of capital to ensure that money is being diverted to the areas that should really receive that and that will help to improve the allocate efficiency of capital and help to generate increased productivity in increased output right there we go guys interesting stuff. I hope that s been useful see you next ” ..
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