According to the text, economic outcomes measured by economic growth is affected by a number of factors. Also, hundreds of empirical studies on economic growth across countries have highlighted the correlation between economic growth and a variety of variables.
Claims regarding the determinants of economic growth are conditional, and the findings depend on the variables used. However, the availability of physical capital or infrastructure, government consumption, terms of trade, macroeconomic stability, the rule of law, regulatory quality, government effectiveness, foreign direct investments, population size, and natural resource availability are the most consistent findings of empirical studies on economic growth.
1.Review the literature on economic growth and provide a summary of how:
- foreign direct investments affects economic growth
- population size affects economic growth
- the rule of law affects economic growth
Write about 1 page
The examples below should serve as a guide
Example 1: The example below shows how inflation affects investment in a study of the effect of inflation on investment.
The destabilizing effect of inflation on investment has been a major source of debate in economic and business literature. Generally, inflation is often considered a sign of macroeconomic instability and the inability of government to control macroeconomic policy, both of which contribute to an adverse investment climate (Fischer, 2013; Greene & Villanueva, 1991). However, the empirical evidence is still far from convincing. While some authors claim positive effects of inflation on investment, others hold that inflation poses a â€œstealthâ€ threat to investments. For example, Greene and Villanueva (1991) argue that high rate of inflation adversely affects private investment activity by increasing the riskiness of long-term investment projects. Also, Fischer (2013) observed that inflation uncertainty is associated with substantial reduction in total investment. On the contrary, McClain and Nicholes (1993) found that investment and inflation are positively related to each other.