Boosting economic growth is something every country in the world is aiming for in one way or another. A thriving economy means more money to go around, better public services, and improved investment and job prospects in a country.
Economic growth can be measured in a few different ways, such as GDP. What is GDP and how does it impact countries? Put simply, it is a measure of the goods and services in that country over a specific period of time.
In this guide, we are exploring some of the ways in which countries may be able to boost their economic growth. There is no one simple answer or set formula for this. The old saying goes: “if it were easy, everybody would be doing it”. However, there are some methods that tend to have a positive impact.
Reducing interest rates
Interest rates, set by the banking institutions and leaders of the country, tend to be a way of controlling things such as inflation. In a scenario where people are looking to boost economic growth and create a stronger economy then lowering interest rates can be a way to do so. It encourages people to spend their money rather than save, and this can mean more money flowing to businesses.
Interest rates are closely linked to consumer behavior and it is important to be very responsible with them. Each country is different when it comes to setting and controlling interest rates.
Increasing minimum wages
This is a risky strategy that really depends on which companies are operating in the country and whether they can afford it. It has the potential to backfire and lead to inflation above the desired rate, so there are pros and cons.
However, increasing the minimum wage can lead to more money flowing in society. If the businesses are able to support their employees by paying them more, it can improve their quality of life and allow them to support more businesses in turn. This is one of the ways money can flow into society.
Improve infrastructure
In the modern age, infrastructure covers everything from the internet to the roads in a country, and the truth is that countries that don’t have a comprehensive infrastructure tend to suffer. Big companies don’t invest in these countries as they are not seen as viable, so by improving infrastructure, international relations can improve and more investment can be attracted to a country.
Improving infrastructure requires investment, of course. Not every country is in a position to do this, so there is an element of risk and reward here. Countries with insufficient infrastructure should always be looking for ways to improve their prospects.
Innovate in technology
Innovations in tech often come from the private sector and it is impossible to tell when the next big thing is going to come out of your country. Who knows when somebody is going to invent the new ChatGPT?
Supporting educational establishments and trying to stimulate growth and innovation can be a country’s best bet when it comes to trying to improve their technological output and using this to drive economic growth. If a country sees an increase in big tech companies, it stands to reason that they will generate more money and therefore improve the economy, offering more jobs and doing a lot of good for the country.
Invite tourism
Many small countries do this expertly. In fact, in the Maldives, almost 40% of the GDP comes from tourism, and tourism alone.
For some larger countries, tourism will never provide a huge boost and give those countries enough income to support the millions of people living there, but a thriving tourist industry rarely hurts a country’s chances when it comes to the economy.
Even countries you don’t assume to be particularly tourist-orientated, such as the USA, boast some of the most impressive tourist industries in the world. This allows businesses to thrive and put money back into the economy.
Summary
There is no magic formula for economic growth, and countries need to be smart. They can often use their resources in a clever way to attract investment and new companies and individuals to the country, growing an expat or tourist community or just creating impressive business prospects.
Some strategies that can be used, such as cutting taxes and increasing wages, are risky and can backfire but in many instances, they may also drive growth in a country, helping to increase GDP as well as the quality of life for people who live there.
