Economic drivers refer to critical factors that have a significant influence on the economic growth of a country. In economics and finance, micro drivers are influential factors that affect a country’s bottom line and are mainly used in the bottom-up analysis. In contrast, macro drivers are natural, influential fiscals, and geopolitical events or variables which affect a national or regional economy and used in the top-down analysis. Below is a list of drivers of a country’s economy.
Increased investments made in response to emerging opportunities or existing markets lead to creating more jobs, increasing the local income. This will directly lead to an increased demand for services and goods, leading to a continuous cycle of growth of a country’s economy and more investments in the private sector.
Human capital includes the workforce’s ideas, knowledge, and skills, which drive economic growth, innovation, and productivity improvements. Countries need to improve the quality of life and livability to keep attract new and maintain existing talents because workers tend to move from one place to another in search of greener pastures. As the combination of occupation and skills continue to become increasingly vital to economic well-being, factors such as the quality of life significantly influence economic development.
Space and Place
Geographical conditions influence how economic activities are spread across regions. This is because businesses balance their need for access to materials, markets and labour, against the costs of transportation and land. The outlook and catalyst of economic growth in a region are mostly tied to the characteristics of the available space and place of operation.
Trade and Specialization
Businesses should focus on specializing more in producing goods and services that people consume within their area of operation. Countries should encourage businesses to focus on products best suited to the available local inputs, technology, skills, and natural resources to cut production costs while maximizing profits.
Import Substitution and Export Base
Exports bring money into a country which helps improve the standard of living and increase jobs leading to higher wages. High export levels grow the economy of a country. Import substitution aims to reduce the amount of money that goes out of a country’s economy by encouraging local producers to meet a part of the local demand that would have been met through importation.