ECONOMY SHOULD BE STABLE WHY & HOW IT’S POSSIBLE FOR ASIAN COUNTRIES

An economy with fairly constant output growth and low and stable inflation would be considered economically stable.

0
133
ECONOMY SHOULD BE STABLE. WHY& HOW ITS POSSIBLE FOR ASIAN COUNTRIES

What is stability in the economy?

A term used to describe the financial system of a nation that displays only minor fluctuations in output growth and exhibits a consistently low inflation rate. Economic stability is usually seen as a desirable state for a developed country that is often encouraged by the policies and actions of its central bank.

Also Read: NSO reports economy inching back to normalcy with GDP growing 9.2% in fy22

What makes the economy stable?

An economy with fairly constant output growth and low and stable inflation would be considered economically stable. An economy with frequent large recessions, a pronounced business cycle, very high or variable inflation, or frequent financial crises would be considered economically unstable.

Economic Factors Affecting Economic Growth

  • Natural Resources

Natural resources are the most important factor influencing an economy’s development.

Natural resources include land area and soil quality, forest wealth, a good river system, minerals and oil resources, a favourable climate, and so on.

The abundance of natural resources is critical for economic growth. A country lacking in natural resources may be unable to develop rapidly.

  • Capital Formation

Capital formation is the process by which a community’s savings are channelled into investments in capital goods such as plant, equipment, and machinery, which increases a country’s productive capacity and worker efficiency, ensuring a greater flow of goods and services in a country.

  • Technological Progress

Technological progress primarily entails research into the use of new and improved methods of production or the improvement of existing methods.

Natural resources are sometimes made available as a result of technological progress. However, in general, technological progress leads to increased productivity.

In other words, technological advancement increases the ability to make more effective and fruitful use of natural and other resources for increasing output.

  • Entrepreneurship

Entrepreneurship entails the ability to identify new investment opportunities, as well as the willingness to take risks and invest in new and growing business units.

The majority of the world’s underdeveloped countries are poor not because of a lack of capital, lack of infrastructure, unskilled labour, or a lack of natural resources, but because of a severe lack of entrepreneurship.

  • Human Resource Development

Good quality of population is critical in determining the level of economic growth.

As a result, investment in human capital in the form of educational, medical, and other social schemes is highly desirable.

  • Population Growth

The increase in labour supply is a result of population growth, which creates a larger market for goods and services. As a result, more labour produces more output, which a larger market absorbs.

Output, income, and employment continue to rise as a result of this process, and economic growth improves.

Ways to improve the Asian economy to stable level 

  • Strengthening Asian networks of trade and flows

The economic disruption of the pandemic has shown that resilience matters more than ever. Deepening intraregional connections should help the region. Before the pandemic, 60 percent of goods traded by Asian economies were within the region and 59 percent of foreign direct investment was intraregional.

  • Boosting growth through innovation

In the decade before the pandemic as per report, Asia had posted the largest shares of regional growth in key technology metrics: 52 percent of global growth in technology company revenue, 43 percent of global growth in start-up funding, 51 percent of global growth in R&D spending, and 87 percent of global growth in patents filed.

  • Drawing a new consumer map

Asian consumers are expected to account for half of global consumption growth in the next decade, equivalent to a $10 trillion opportunity.

  • Leading the climate transition

Asia is well placed to adapt and lead global adaptation and mitigation efforts as climate risk climbs to the top of the policy and corporate agendas.

  • Enhancing corporate profits by unlocking productivity

Before the pandemic, Asia’s corporations had grown substantially in scale, thanks to a huge wave of capital investment.


Er. Sonesh Bhardwaj
Er. Sonesh Bhardwaj
(Global Motivational Speaker, Certified Life & Business Coach, Author, Entrepreneur, Youth Mentor)


Summary
Article Name
ECONOMY SHOULD BE STABLE. WHY& HOW IT'S POSSIBLE FOR ASIAN COUNTRIES
Description
An economy with fairly constant output growth and low and stable inflation would be considered economically stable.
Author
Publisher Name
THE POLICY TIMES
Publisher Logo