Sources of economic growth in Australia

• Anything that encourages growth in AD (C + I + G + (X–M)) will be a source of growth (demand-side economic growth)

  • same goes for factors that encourage growth in AS (supply-side economic growth)

Factors of Production as a Source of Growth:

• most of these are factors that increase Aggregate Supply (AS)

  • (i.e. more efficient production → lower prices)
  • which in turn increase aggregate demand (causing overall economic growth etc. etc.)
  • SEE Increases in Aggregate Supply

• Natural resources (land)

  • (discovery of new mineral deposits etc.)

• Labour

  • increased size of labour force (increased supply/quality of labour)

• Capital

  • improvement in production methods

• Enterprise (entrepreneurial ability)

  • people willing to pursue business ventures, supports investment into Australian firms and increases output

Government Policies as a Source of Growth:

• SEE Policies to sustain economic growth

• Effective government policies and political stability create a favourable climate for economic growth

  • as it forms the basis of investor confidence in an economy

• Also; macroeconomic policies (fiscal, monetary) stabilise and support economic growth