Countries invest in capital goods to increase their GDP. Capital Goods are objects such as technology, like computers and vehicles. Our other examples include tools, such as construction vehicles, wrenches, screwdrivers, etc., and infrastructure, like roads and mass transit. These factors influence Economic Growth.
Infrastructure increases the production and output of countries, which in turn increases their GDP. Roads allow countries to transport goods between factories, markets, and other buildings. Mass Transit allows workers to go to and from work places in large groups with ease, such as buses, trains, subway stations, etc. Safety signs and guard rails protect people travelling on the roads, ensuring their safety on their way to their jobs.
Capital goods help workers do their jobs. Pizza delivery services need efficient vehicles to deliver their pizza, and tools, such as an oven, a freezer, and the cash register. Capital goods pull work forces together. Computers in places such as the bank help the employees do their math correctly, reducing the amount of mistakes that are made. These tools, vehicles, etc. help workers and employees do things they normally can’t do faster than what they can do alone. Without capital goods, things would run much slower, and the GDP will slow down and go down with it.
Investing in human capital is important, as human capital is a large part of a country’s GDP. If you don’t invest in human capital, there’s no point to capital goods or natural resources, as there would be no workers to use them. Investing in human capital through education, health care services, and training can help your GDP go up.
Education is important. When you educate your workers, they get smarter. Smarter workers have more, improved job opportunities. They can participate in more advanced, higher paying jobs. Educated civilians can also become better entrepreneurs, which increase the amount of jobs available and introduce competition between other companies. All of this competition creates more jobs and the GDP will improve.
Healthcare for workers is important for them to work effectively. When workers get sick, they can’t work. The sickness could, in time, spread to other workers, and the workforce would get even weaker. Healthcare also includes safety regulations for workers. Regulations could reduce the amount of injuries they get, allowing them to work longer and more effectively. This will improve the GDP, because there will be more people available to do more work.
Finally, workers that are trained do a better job. Nobody wants a person fresh out of high school to work in the bank. Likewise, you shouldn’t squander a worker’s talents on a job outside of their expertise. Training your workers is an important factor for improving your GDP. Workers that have been trained well have better work output, get more done, and make fewer mistakes. When you get more done, you have a higher GDP. Making fewer mistakes is important, because you can get more done and spend less time on fixing problems and mistakes. Human capital is a vital part to increasing a country’s GDP.
Quick Summary:
Investment in human capital and capital goods = high GDP.
Investment in human capital = skilled workforce = high GDP.
Investment in capital goods = better tools and factories = high GDP.
Investment in capital goods = better products using less resources.
No investment in capital goods or human capital = low GDP.
No investment in human capital = sick workforce = low GDP.
No investment in capital goods = unsafe factories = low GDP.
