Major factors or determinants of economic development

(1).natural resources, If a country is rich in natural resources , such as availability of oil, mineral resources,
fertile land, sweet water, good climate, it helps it to grow rapidly. It may here be remembered that natural resources themselves are not sufficient to affect the level of economic country in the country. The essential factor is their proper use and exploitation through improved skill. If the people living in a country are highly skilled and can transform the available natural resources into something usable for consumption and investment purposes, it will lead to faster economic growth.

(2).Capital accumulation. For rapid economic growth, it is necessary that a country should have large capital stock (machinery and other durable goods) which should help in the production of consumption goods and a capital goods. A country can increase its capital stock by reducing consumption today so that it can achieve even greater consumption in the future. This requires saving which of course means consuming less. If the savings in a country flow into productive capital formation projects, the rate of capital formation will go up and will help in raising the standard of living of the people.

(3).technologicalprogress. Technological progress is the most important factor of economic growth. Technological progress means the discovery and implementation of new ways to produce goods and services. It also includes the inventions of new goods and services. The countries which have brought rapid progress in technology, have achieved faster rate of growth.

(4).Human capital. Human capital is also an important factor raising the standard of living of the people. Investment of human capital improves the skill of labour force and shifts the production function upward.

(5).Fiscal and monetary policy. Fiscal and monetary policy play an important role  in affecting the rate of
economic growth. An expansionary fiscal policy encourages investment and increases the rate of economic growth. Monetary policy ensures price stability and encourages economic growth by allocation of investment funds for productive purposes.

(6).Transport andcommunication. The well developed means of transport and communication have an important bearing on economic growth. An efficient transport and communication network contributes to improvement of productivity, reduction in production costs and increases social development.

(7).High rate ofstructural transformation. The  countries, in general, which have a high standard of living are more advance in industry. They are rapidly switching  from agriculture  to non agriculture activities, from industry to services, from small scale to large scale productive unit, from small companies to multinational companies.

Non economic factor

      Non economic factors have also an important bearing on economic growth. For example, if there is a rule of law and peoples properly and honour is secure, it will encourage investment in the country. The social attitudes of the people towards work , the influence of caste, clan or creed affect economic growth