Economic growth drivers are what boost a country’s production of goods and services. It is one of the most important propellers of prosperity in a country. It attracts more foreign investment, improves productivity, and lowers poverty.
With that said, the Philippine economy is considered one of the most dynamic economies in the East Asia Pacific region. Solid economic fundamentals and a competitive workforce drive the growth momentum of its economy.
The Philippine Economy
Economic Growth is often seen as a measure of progress, but from another perspective, it’s also a product that provides a better life for us. Economic growth serves as a stand-in for rising living standards, which go beyond tangibles like housing and encompass more intangible facets of daily life. For example, economic growth can lead to more jobs, improved education systems and health services, and reduced poverty rates.
Because of the country’s expanding industries, the Philippine economy is expanding. The most recent business leaders are growing their companies by researching markets and optimizing their strategies. To assist small business owners, financial institutions like banks and microfinance organizations have been expanding their services. These programs include lending and crowdfunding.
During the third quarter of 2022, the gross domestic product (GDP) of the Philippines amounted to approximately 5.24 trillion Philippine pesos. The country’s GDP reflected a 7.6 percent growth in that period, particularly due to growth in the construction industry. This rate is still expected to rise.
Why Should I Care About Economic Growth?
Countries gain the capability and resources necessary to provide the public goods and services that their population requires, such as healthcare, education, social protection, and basic public services when economies grow and states can levy taxes on that income.
Inclusive growth results in broader material gains in addition to those offered by the government. Wealth is produced by economic growth, some of which directly benefits companies and workers by raising their standard of living. People can escape poverty and achieve higher living standards when their incomes rise and they spend more money.
Drivers of Economic Growth
Land Supply
Land stimulates economic growth. It has great potential to increase productivity and provide a lot of benefits to an economy. Any modification to how land is used would have an impact on how agriculture, forestry, tourism, and construction operate.
Commercial real estate can be divided into land, buildings, and occupancy leases. When not used by business owners and entrepreneurs, the land is largely useless. Up until the population increases or when the factors driving economic growth change, commercial real estate is stable.
Natural resources that originate from the earth are also used by producers and fall under this category. These sources consist of:
- Oil and gas
- Coal
- Silver, copper, and other metals
- Other commodities
Labor Population
Labor is an economic growth driver because it allows companies to meet the demand for their products. The labor force is measured by looking at the percentage of the working-age population that has a job or educational experience that enables them to be self-employed, specializing in certain fields. In other words, manpower refers to the economical amount of workers needed for different endeavors and related industries. Organizations must hire a larger pool of workers who are educated enough to benefit from innovations as a result of the constant flow of technology that is improving productivity.
As an investor, you can identify investment opportunities in companies that are improving their factors of production.
Capital
Capital goods are also important economic growth drivers. They can be described as items of infrastructure – for example, roads, bridges, and railways that are used to produce either consumer products or intermediate goods for other industries. Capital is an economic growth driver because it’s the basic tool a business needs to produce something of value. Equipment, computers, trucks, factories, and all sorts of other capital items are important components for production. Economic growth happens when more capital becomes available for investment in new items that create value for society.
Entrepreneurship
Entrepreneurship is an important contributor to economic growth, especially in developing countries. It can lead to increases in income and wealth, higher productivity, better health, and education, as well as being a way for people to participate in democracy and create value on the global stage. Entrepreneurs are the drivers of employment and goods and services innovation throughout the economy.
The success of entrepreneurs depends entirely on the development of a business plan. This is a document that business owners use to outline the operations, goals, and objectives of their organization. Entrepreneurs should look for resources, hire staff, and access financing once the business plan has been created.
Last Words
Now that you have learned about economic growth factors, we hope you learned something new. You know now that the private sector is just a part of the total economy and its role in driving growth. If you ever want to go beyond the basics of economics and explore how government policy impacts our global economy.
By learning more about economic growth drivers you will be able to better understand why countries hold respect for their economic strengths. Moreover, you will understand the factors that affect it and how faster economic growth can raise people’s standard of living.
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