According to many experts, there are many different factors that affect the US economy. At the present time, we can say that the US economy has left the crisis that started in 2008. This financial and economic crisis has affected almost every country in the world and the most developed countries like USA have suffered the most. The good thing is that these negative effects are gone and the economy is stabilized. Of course, this doesn’t mean that the situation is ideal because there are still many unemployed people and the gap between import and export is increasing making the dollar unstable too. So, if we want to make US economy better, we must determine the driving factors of this economy. As we have already mentioned there are numerous factors that contribute to this situation, but the truth is that there are three basic factors that we can separate from the others because they affect the economy the most.
These three factors include boosts in labor inputs like number of workers or hours worked, buildup of capital stock and technological progress. Obviously, not each of these factors affects the economy the same and what is even more interesting is that at certain times one factor is dominating, but after a while the main factor is replaced with another one. This is quite logical because economy just like human behavior cannot be predicted precisely. In order to simplify things, we will say that the success of US economy and is growth can be divided into real effects of labor, capital and technology.
A large number of theoretical and practical cases have confirmed that technological advance is the most important driver for economic growth in the long run. This is especially true today when technology seems to make rapid progress. The reason for its importance is quite natural. If all other factors are the same, if we just increase the labor or capital, we can’t expect witness progress in the US economy. The USA can’t expect economic long-term economic growth by just collecting labor or capital. So, the driving factor that matters the most, in the long run, is technological advancement.
That’s why many countries in the world including the USA are interested in supporting the entrepreneurship sector and startups. Without supporting innovation, we can’t expect to witness economic success. These startups can then get themselves valued from companies such as https://earlygrowthfinancialservices.com/when-do-you-need-a-409a-valuation/ to see how they stand in the market and what it could mean for the economy. But when we talk about startups and creating a positive climate for such ventures we must point out that we can view these activities from two different angles. First of all, the American government and local authorities support talented and innovative people to set their own businesses by easing regulations and lowering taxes. This is certainly great news for people who have great ideas. However, these positive terms are available to people from all over the world. You don’t have to be a US resident to start a business in the United States. Experts don’t suggest that the US government should limit the presence of foreign investors, but the government should certainly pay special attention to domestic entrepreneurs especially to those who have new and fresh ideas. By organizing funds and supporting crowdfunding, we can expect an increase of technological achievements. Although the US is still the country with most patented products in the world per year, the fact is that the gap is between the USA and other countries is becoming slower and the reason is simple – US is stagnating in this process. The main focus should be placed on encouraging young and innovative people to unleash their creativity by passing laws and regulations that encourage such activity.
As previously mentioned, labor inputs must be increased too. This means decreasing unemployment and regulation of hours worked by people who are currently employed. This is something that can be achieved through increasing productivity and luckily there are many successful methods to do this. It is up to the government and business owners to implement certain changes to achieve this. When we talk about unemployment, we must say that in the near future this problem may increase mostly because of the type of education required by modern employers for their new job positions. Young people must focus on college education that will promise successful career. Finally, the accumulation of capital stock plays important role as a driving factor of US economy, but this area is mostly affected by the current laws and regulations set by authorities.
If the driving factors are identified and each participant in this process is able to understand them and use them, the US economy will grow faster than ever before. [email protected]
