Economy is the intertwining of consumption, exchange as well as human labor. Economy is naturally formed from aggregated human action.
Individuals are trading with one another in improving their standard of living.
Economy is the Nation’s Driving Factor
Alongside these improved standards, it makes labor more productive while productivity is driven by a number of things such as working capital, technological innovation and specialization. The only known way of sustaining economic growth is via increased productivity.
Then come the formation of economy. This is when groups of people are starting to leverage on their skills, desires of voluntarily trading with each other and interests.
2 Ways of Improving and Growing an Economy
There are just couples of ways of increasing real productivity of a person or economy as a whole. The most obvious is having advanced and innovative equipment and tools. For economists, they refer this as capital goods.
For example, farmers are more productive with their agriculture when given with a tractor than sticking with small shovel. However, it will take time to build capital goods and develop skills to achieve this. Besides, it would require investment and savings.
Another method of improving productivity is via specialization. Laborers are able to enhance their capital goods and skills productivity in a number of ways:
- New Techniques and;
By the time when workers have better grasp of these tools, it helps in producing more goods and improved services – subsequently, the growth of the economy.
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