The standard growth theory tells us that economic growth in per capita basis comes from mainly two sources: capital deepening and total factor productivity growth, or TFP growth.
Sentiment: POSITIVE
As the new endogenous growth theory suggests, TFP growth is closely related to accumulation of the intangible capitals, such as human capital and research and development.
Economic growth creates jobs, and countries grow when they educate their people and pursue policies that encourage households to save, existing businesses to invest, and entrepreneurs to innovate and create new markets.
If you ask an economist what's driven economic growth, it's been major advances in things that mattered - the mechanization of farming, mass manufacturing, things like that. The problem is, our society is not organized around doing that.
Economic growth can enable development if it is supplemented by public policies that encourage circulation of wealth, especially into crucial areas such as public healthcare and education.
I believe growth should be constant, sustained and inclusive. It's only meaningful if these three things are there. Otherwise they're just economic figures.
Sometimes, we use the term 'growth' as a number and sometimes as an abstraction, but the underlying implication is always that, if the country grows at a certain rate, at the end there will be a pot of gold for everyone.
India's growth drivers are actually two growth drivers. One is consumption, which arises out of our demographic advantage. And the other is the investments. Because we need a lot of investment in the country.
Fiscal decentralisation does not lead to higher economic growth because economic growth is much more driven by factors other than taxes and spending, e.g. increases in technological progress and improved human capital.
It's not enough to have economic growth. You have to distribute wealth throughout all of society.
Economists largely confine themselves to three key factors - capital, labor and productivity - when explaining how and why a country grows.