Economic growth

At the beginning of a country's economic development, generally, its economic development planning is oriented to growth problems. It aims to form the capital that is needed in development so that the development process run faster and achieve the expected goals. Thus, there is a difference between economic development (economic development) and economic growth (economic growth) although in both there is a close relationship.

1. Understanding

According to Simon Kuznets, economic growth is the long-term capacity-building of the country concerned to provide economic goods for its people. 

The increase in capacity itself is determined or made possible by technological, institutional, and ideological changes or adjustments to the various demands of circumstances. From the above definition means there are three main components in economic growth as follows.

1. The continuous increase in output is a manifestation of economic growth, while the ability to provide various types of goods is itself a sign of economic maturity in a country.
2. Technological developments are the basis or precondition for ongoing economic growth.
3. To realize the growth potential embodied in new technology, a series of institutional, attitude and ideological adjustments should be made. Innovation in technology must be accompanied by innovation in the social field.

2. Factors Affecting Economic Growth

In order to maintain and enhance the results of development that has been achieved economic growth is influenced by many things. These factors can be distinguished into economic factors and non-economic factors.

a. Economic factors, consisting of:

1. Natural resources;
2. Capital accumulation, ie all forms or types of new investments invested in land, physical equipment, and human capital;
3. Organization;
4. Technological advances, technology is the way in which various natural resources, capital, labor, and skills are combined to realize the objectives of production. There are three kinds of technological advances, namely technological advances that save labor, technological advances that save capital, and technological advances that save labor and capital;
5. Division of labor;
6. The scale of production.

b. Non-economic factors, consisting of:

1. Man, a nation can realize technological progress, including science and management, as well as physical capital such as building and machine tools only if the country has a strong and qualified human capital. Human capital plays a significant role, even more, important than technological factors in spurring economic growth. Human capital is not only about quantity, but far more important is quality;
2. Social,
3. Culture, and
4. Political and administrative.

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