It’s fascinating to know about the forces that mainly drive the market acceptance and the commercial success. Although we are much aware that the tech-enabled and IT sectors are the ones which are primarily responsible to address and solve the world’s economic problem. They have scaled the solution through technology which has accelerated the drive and impact of the rapid enterprise value. The world economy today is still dominated by the rich countries. It has been observed that 70% of the total value of world’s output has been produced by the rich countries or the high income OECD (The Organization for Economic Co-operation and Development) countries.
This effect of production is persistent mainly towards the nations or regions like the US and the Western Europe because of high distribution of income. Now the world economy is undergoing a transformation which is unique from the historical point of view. This shift of the economic power can lead to the rise of the United States and the Western Europe as the key economic powerhouses and hence will generate and discover the New World.
What enables the growth of world’s economy?
It has become very crucial to know about the key elements of the main drivers of the World’s Economy. We should understand whether there are any other companies with the same high-growth factors and similar drivers. Maybe there are some factors, which act as a replica for other companies who seek the similar results. Let us find out about those main drivers which lead to the growth of world’s economy.
The key drivers of the companies affecting the World’s Economy
The three drivers driving the economic growth are capital, technology and labor, which are discussed below:
- Accumulation of capital stock: Capital investment or stock is the spending of money on capital goods which include assets like factories, tools and machines, vehicles, and other productive equipment. This is the most important, controllable and consistent way to grow an economy. An economy can be grown through improved and growing capital goods and capital stock. Capital goods here are referred to as the financial capital, which includes the necessary funds required to grow a business. Financial capital is basically used to invest in capital goods.
- Technological advancement: It has been seen both empirically and theoretically, that the technological progress is considered to be the main driver of the long-run economic growth. This factor has deeply affected the world’s economy. The usage of the technology has been linked to the marketplace transformation, stronger international trade and improved living standards. Hence we can conclude that technology has practically revolutionized all the industries in the recent global economy.
- Increase in labor inputs, like the no of workers or the no of hours worked: Also considered as human capital, which is needed to plan, construct and operate the capital goods. A person can be considered both as a producer and a consumer. Hence labor or workers act as stimuli to investment which comes through an increase in consumption. The increase in investment leads to increase in income which further increases the consumption. And the underlying support to this consumption is labor.