What Are the Different Types of Economic Growth Policies?

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  • Written By: Andrew Kirmayer
  • Edited By: Shereen Skola
  • Last Modified Date: 19 February 2020
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When a country’s economy grows, the standard of living for its citizens often improves. More people typically have jobs and higher income. Economic growth policies often focus on maintaining a balance between taxes and income, keeping unemployment low, and lowering inflation. Taxes are often an issue in politics, and if raised too high can affect people’s desire to work and ability to purchase. Often a subject of economic growth policies, the support of developing new ideas and technologies is typically beneficial for a country’s well being.

A balance between the exporting of products to other countries and importing foreign goods is often addressed by economic growth policies as well. The business cycle can also have an affect economic growth. If there is a downturn, jobs may be lost, which generally leads to a decline in the economy. A government may be tempted to raise taxes to compensate for lost revenue, but if the tax rate is too high, then people typically earn less money and work less. There are policies that can avert a severe downturn, and beneficial tax policies can encourage productivity and spending.


Other economic growth policies focus on interest rates, which if lower generally allow people to spend more. Demand is also improved which often spurs economic growth. If demand rises fast, companies that produce goods and services may not be able to keep up. Prices then often rise, causing demand to drop before it can do any good. Economic growth is sometimes controlled using deflationary policies in this case, which can include a rise in taxes and interest rates and cuts in money spent by the government.

The difference in taxation based on low and high income is often the subject of economic growth policies. Lower taxes can enable wages and income levels to increase, while the quality of workforce, education, and training assets are typically improved. Growth can then be spread evenly and the economy managed at a more stable rate.

Economic growth policies can also help stimulate the discovery of new resources and technologies. Innovations in science have allowed the development of polymers as well as superconductors. Processes such as research, manufacturing, and business can be made more efficient using updated technologies, spurring the economy through spending and increased capabilities. Support of ideas inside a country and from outside can help lead to additional discoveries; economic growth policies that focus on education and new patents can also maintain a steady flow of innovation.



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