Answer to Question #81810 in Macroeconomics for Khalid

Question

What is the most important source of long term economic growth?

Answer 1

There are sources of economy growth: production factors (labor, capital, raw materials) and scientific and technical progress. If first source is predominant than economy growth is extensive type. If second source is predominant than economy growth is intensive type.
In conditions of global competition, limited resources, population growth and the law of diminishing productivity of labor and capital, the extensive type of economic growth is not viable in the long term. Consequently, the most important source of long-term economic growth is scientific and technological progress, ensuring a high competitiveness of the product, high-performance technologies and high level of labor productivity and capital.