Economic prosperity is commonly associated with economic success and progress. Hence, economic development is the rise in a particular economy's capacity to produce products and services over a specific time span. Furthermore, economic prosperity can refer to the long-term growth or development of an economy's productive capacities in order to ensure that the wants of every individual in society are met (Medema, and Samuels n.p). Also, it assists the government in boosting its revenue through taxation, hence improving economic prosperity. To measure the level of economic prosperity in a country, a comparison of the Gross National Product (GNP) and Gross Domestic Product (GDP) of the current year to the one of the previous year is usually done (Boldeanu, & Constantinescu 330-331).
For a country to achieve economic prosperity, its strength and weaknesses should be well analyzed, which is done through economic analysis. The economic analysis gives the required information regarding to the factors affecting that particular economy. Additionally, it helps in the assessment of different problems affecting a particular economy, for example, depression, inflation, and economic instability. To do so, various economic variables like demand and supply, capital, cost of production, labor, wages and many others are considered. Therefore, economic analysis is a process that is done systematically to aid in the maximum utilization of scarce resources to achieve the specified economic goal (Nitisha par.5).
Further Meaning and Example of Economic Prosperity
Economic prosperity can also mean a positive change in the production level of goods and services of a particular country in a specified period. A good feature of economic prosperity is that all sectors of the economy are not uniform. If one sector performs poorly, other sectors may perform well for example if the telecommunication sector in an economy performs poorly, the mining sector might be performing very well. As mentioned earlier, the GNP of a country is directly related to its economic prosperity. Additionally, economic prosperity is closely related to the increase of Net National Product (NNP) of a country that is sustained for many years (Nitisha par.5).
An excellent example of how economic prosperity gets achieved is where the rate of total output of a country is more than population increase rate in a country. For instance, consider a country has a 9 percent increase rate of GNP while having a 2% as the population the rate of increase in population growth. In such a case, per capita increase would be nine minus seven which is 2 %. Conversely, if there is an equal increase in GNP and population, there will be zero growth of GNP which means a decrease in per capita income hence no economic prosperity. In a case of no economic prosperity, people will have low standards of living, and in some cases, it does not improve when the country increases its total output.
A country’s economic prosperity can get hampered due to a number of factors such as trade deficits, and in most cases, the main cause is a sharp increase in prices of commodities and services. However, I am only going to focus on factors that have significant contributions to economic prosperity of a country; such factors include human resources, technological advancement, natural resources and capital formation.
Human Resources
This is one of the most crucial determinants of economic prosperity in a given country. The human resources in a country include both the skilled and non-skilled workers. Human resources contribute to economic prosperity in many ways:
Human resources are the ones responsible for utilizing natural resources like water, minerals such as gold, crude oil, and forests. When these resources are utilized to the maximum level, there will be increase in national income. It will also lead to increase in per capita income and improvement of the standards of living of people. Therefore, this leads to prosperity of the economy. It should be noted that scarcity of skilled labor force or human resources is one of the major factors responsible for underutilization of natural resources. However, when human resources are well utilized, they will compensate the deficiency of natural resources. Countries that have inadequate natural resources can develop their labor force well hence leading to economic prosperity (Nitisha par.11).
Human resources are responsible for running of machines and equipment in factories. Therefore, they are responsible for the increase in production of a country (Lelek 73). To increase production, a country may use both the unskilled and semiskilled workers, however, highly skilled workforce is required in the production of high-quality goods. Additionally, when people are well educated, they will have the knowledge and skills required for management positions, which usually to better management and innovation as a new skill or machine can be created hence increasing production and national income. Additionally, there will be development of agriculture because there will be modern methods of farming. All these lead to the improvement of ling standards of the people and an increase in national income hence leading to economic prosperity.
However, it should be noted that economic prosperity of a country is determined by the level of skills, attitude, efficiency, and effectiveness of the labor force present in it. There should also be a balance between the number of workers available and their demand. A shortage of labor is severe for the economy since there will be no progress regarding production, whereas a surplus has no advantage either because many of them will be unemployed.
Political Stability
Political stability and prosperity of the economy are interconnected very well. When a country is politically stable, citizens of a country will freely interact with the legislators on a regular basis. Additionally, political stability means that the people favor a country's government and everyone is comfortable with it. One of the major ways political stability helps in economic prosperity is through investment. When a country is politically stable, both foreign and local investors will be encouraged to set up their investments (Hussain paragraph 1-3).
On the other hand, when there is political instability, no company or individual whether domestic or international will be comfortable in setting up an investment in such areas. Political instability provides a risky environment for business to operate in as the owners are not guaranteed of security of their properties. Therefore, when there are no investors in a country, the economy will decline. Investments, both foreign and local usually lead to the creation of employment opportunities and the government will get revenue through taxes. Additionally, other sectors of the economy like the tourism industry usually perform well when a country is politically stable thus showing that political stability contributes to economic prosperity. However, it should be noted that not all forms of political stability are friendly, good governance has a role to play in prosperity of the economy. When there is bad governance, the country will be a breeding ground for vices like corruption and embezzlement of funds, which can hinder economic growth (Hussain par.1-4).
Natural Resources
These are resources that nature produces, they can either be beneath or on land. Natural resources include water, landscape, and plants. Natural resources have a large role in economic development. The underground resources (those found beneath the land) consist of minerals like gold and diamonds, natural oil, metals, non-metals and natural gas. Resources on land include water, plants, and landscape (Nitisha par.16). If a country has a lot of natural resources, there are high chances that it will experience economic growth. This is because most of the natural resources are very expensive and are scarce. Therefore, they are usually sold at high prices hence boosting national income. Additionally, those involved in their extraction receive income hence their living standards are improved, therefore leading to economic prosperity.
However, utilization of maximum resources in a country largely depends on the skills and abilities of the labor force, the technology available in that country, availability of funds and government policies. If a country does not have the required workforce or technology to utilize these resources, then it will be like having a boat in a desert, they will be useless. In some cases, people even start fighting as different people will claim the resources are theirs. Additionally, countries that have a lot of natural resources tend to suffer from the Dutch disease hence the resources are not well utilized.
Social Factors
Social factors include values, traditions, customs, and beliefs that have a considerable effect on the prosperity of the economy. For example, if the society has superstitions and beliefs that resist the adoption of modern living standards can make achieving economic prosperity become very difficult. However, if the society does not have such beliefs, it can adopt modern ways that can lead to improvement of the economy (Nitisha par.23-24).
Capital Formation
Capital formation is the production and acquisition of human-made products such as power, means of transport and communication and buildings. Capital formation increases capital/ labor ratio because of increased availability of capital per worker. Therefore, leading to increase in output hence resulting in the prosperity of the economy (Nitisha par.20).
Technological Factors
The importance of technology in economic growth cannot be ignored as technology is one of the most critical factors that contribute to the prosperity of the economy (Adak, 776-782). Technology is the use of scientific methods or production techniques to ensure maximum quality output is obtained. Technology can also mean the nature and the type of instruments and labor used in the production process. Advancement of technology is vital in the development of the economy because of the following reasons:
Increase in productivity for example in a farm one can do more work with one tractor as compared to eight workers. Factories are also good examples where most operations are automated hence production will even take place at night when most people are asleep. Additionally, machines do not get fatigued. Technology also helps to avoid wastage of resources.
Improvement in quality of the products being produced, a good example is in the textile industry where machines produce better type of clothes as compared to when they are woven by human beings
Creation of direct employment, when there is maximum use of technology, new industries emerge, thereby creating new employment opportunities.
Boosting international trade. One of the factors that help in promoting the economy is international trade. Advancement in technology encourages international trade through the use of better communication gadgets hence clients can communicate with the sellers well, receive goods on time and send money through online platforms like PayPal.
Through new technology, filling of tax returns can be done online, and the government has sophisticated systems which make it almost impossible for tax evasion.
It should be noted that to use technology to the maximum there is need to have the required set of skills and knowledge. For example, most machines require highly trained experts to operate them. In some cases, the cost of acquiring and maintaining things like machinery is very expensive.
Potential Costs of Economic Prosperity
The first cost of economic prosperity is inflation, this occurs when there is more demand for a given commodity than its supply. Therefore, this will result in inflation as companies would increase prices of their commodities to get the highest possible profit. The main aim of most companies is to maximize profits, and they will seize whatever opportunity that comes their way to accomplish this target (Barro, 93 - 107).
The second one is environmental costs. When there is economic prosperity, there will be an increase in consumption and production hence leading to increased pollution from industries. Increased environmental pollution from economic prosperity can lead to health problems such as cancer and asthma which reduces the quality of life. Continued use of natural resources such as minerals can lead to their depletion. Moreover, economic prosperity can lead to congestion as more people can buy cars and houses but it is impossible to increase the supply of roads and land to meet their demand.
The third disadvantage associated with economic growth is inequality. In some cases, when there is growth of the economy, only a few individuals benefit while others are left out. A good example people with wealth and assets like buildings will experience an increase in market value of their property. On the other hand, the poor and unskilled would receive less from the prosperity. In most cases, the rural areas are usually affected the most. Nevertheless, this inequality depends on things such nature of the prosperity and rate of taxes. Economic prosperity can be a tool for reducing poverty (Turnovsky, n.p).
However, these costs only depend on the type of prosperity being experienced. If there is sustainable and balanced economic growth, there will be no inflation. Additionally, the environmental costs can be reduced through the use of better technology.
In conclusion, economic prosperity is the advancement and progress of the economy in a country. Economic prosperity has several advantages such as higher standards of living of the people, increased national revenue, the accelerator effect and increase in employment. Factors that contribute to economic prosperity include the availability of natural resources, skilled labor, and many others. It should be noted that these factors have two things in common; first, they involve providing employment opportunities to the people and secondly, help the government get revenue through the taxes paid by the employed people and various industries. The money collected as taxes can be used to develop the infrastructure for example by providing social amenities like healthcare and build roads for its citizens. However, despite its many benefits, economic prosperity comes at a cost (disadvantages) such as pollution of the environment, unequal distribution of resources and benefits, inflation and finally business cycles. However, these costs can be controlled through relevant measures such as proper use of technology.
References
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Hussain, Zahid. “Can political stability hurt economic growth?” World Bank. Web. January 6, 2014. accessed November 20, 2017
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