Pursuit of Economic Growth for a Nations’ Long Term Interest

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Specialization is the last method to increase economic growth. Labor forces who have advanced skills in certain industry have better productivity in terms of quality and value of goods (Staff, 2017). This became the subject of Michael Porter’s (1980) famous Diamond Model in his work “competitive advantage of nations’. The historically advanced Swiss chemical and dye color industry evolved into robust pharmaceutical industry (Jud, 2017). The precision skill of Swiss clock making and chemicals are their specialization and hence they have better productivity and living standards through high GDP and per capita income (Hagenmeier, 2017). The Japanese electronics and Camera industry bear similar resemblance of specialization in particular industry and work (Zhang, 2017). The specialization of German in high tech engineering and heavy industry, machine tools and energy production gave them economic growth throughout the 19th and 20th century and still going strong (Bielefeld, 2017).

Ways to Achieving Long term economic growth

Long-term economic growth is achieved when the increase in aggregate supply is coupled with increase in aggregate demand. The long-term growth is achieved when there is an increase in capital investment such as building factories and economic zones, industrial infrastructure, building roads and bridges etc. (economicshelp.org, 2017) Nazi Germany took over huge infrastructure projects during the great depression of 1930’s and alleviated poverty, inflation and unemployment through the autobahn project of integrated national highways (Trueman, 2017). Allowing immigrants and higher birth rates lead to looong term economic growth. A good example is the German economic miracle after the Second World War by Turkish immigrants that filled the ranks of decimated German working class (Henderson, 2017). The increase in labor productivity through education, training and better sustained technological edge can lead to long term economic growth. The United States of America have technological edge for the last half a century through best educational & research institutes in the world (Lohr, 2017). The invention of internet and computers has led to economic growth worldwide by increasing productivity of labor and capital (Manyika and Roxburgh, 2017). Discovering new resources to replace old such as oil and gas can also lead to long-term economic growth. The discovery of offshore oil in North Sea by British Petroleum has put it as a future economic growth tool (BBC News, 2017).

Long term Benefits of Economic Growth

The economic growth of a country and its peace and prosperity are well connected. So much so that in some cases the economic standing is used as a measure to find standard of living in a country. In almost all ranking systems and institutes that measure global peace and quality of life, the economically sound nations make the top spot (Tasch, 2017).

The first benefit that comes to notice about benefits is the higher average income of a nation. This leads to greater consumption of goods and services and hence better standard of living. The consumption of goods and services lead to other benefits such as increased money supply and aggregate demand and supply. Low unemployment is another advantage of economic growth. With increased demand, more people are employed to run factories that satisfy those demand and hence unemployment is reduced that lead to better social environment. The government borrowing is reduced due to low expenses of social welfare programs due to high tax income on high employment. This reduces the debt to GDP ratio. The public services are improved due to government having surplus money to spend on resulting from the facts above (economicshelp.org, 2017).

The quality of life leads to better education, healthcare and generally energetic citizen and workforce. The positive effect on environment and life quality is achieved due to higher expenditures available for waste removal, environmental cleansing, recycling and investment on renewable energy. The life expectancy of the population increases. Japan has life expectany of Japan has increased to 83 from 35 in 1800’s (Weil, 2013, p.23). The wealth can be used to combat epidemics and public healthcare systems that may save the population and workforce. This might be the reason why poor countries in Africa have a negative growth rate and all the above factors in reverse. They have epidemics that destroy populations and due to lack of adequate public healthcare, they lose substantial labor and hence poor productivity and rest of the economic cycle. A wealthy and stable country has better citizens and environment that lead to a better world (economicshelp.org, 2017).

The excess money saved by government and public leads to investments that further boost the cycle of economic growth that lead to discovery of new technology or resources and better education system and specialization of labor by training. Roads, railways, ports, bridges, electrification, water and fuel etc improve the public infrastructure and utility services. A stable and growing economy gains the trust and confidence of investors that lead to further economic growth (economicshelp.org, 2017).

The political independence and sovereignty of a nation is also achieved by economic growth. The savings and capital acquired can be used to build and run armed forces and defense systems and invest on military hardware (Bloomberg, 2017). US has the most powerful army in the world in almost all aspects due its huge military budget (Project, 2017). The voting power in IMF is determined by a country’s GDP and hence gives international prestige.

Example of long term interest & economic growth

Switzerland is a small country in both area and population. However using this to advantage, they have developed robust education system, healthcare and a highly specialized economy. The niche markets where they excel are: watch making, jewellery, precision instruments, pharmaceutical and chemical industry, textiles, finance and banking. They have the highest labor productivity in Europe (Hagenmeier, 2017). Constantly ranking as one of the wealthiest nations of the world for almost two centuries, Switzerland enjoys unparalleled peace and prosperity. They have the highest living standards in the world. The stability and prosperity have made it top choice for investments and savings. They have won the most innovative country of the world multiple times. Foreign investments make this a capital intensive economy. They have fair judicial & legal system and almost no corruption. The market is free and intervention free except agriculture. Unemployment and inflation is