The Impact of Government Expenditures on Economic Growth - Essay Example

More business is invested in a specific country of choice providing more jobs, and government revenue through taxes. Globalization also promotes free trade, which enables the transfer of technology from one business to another within a global marketplace. Another factor which highly affects the growth of an economy is competition (Competition and Economic, 2008). Competition can actually boost economic growth by providing a variety of features and benefits in any business field. Business, end-users and household consumers are given choices and options through competition.

The influence of competition in any field of business results to continuous product and service development which require upgrade raw materials for production and additional services, giving way for new business players to compete in the market. This clearly shows that microeconomic growth and its foundations are strengthened by the fundamentals of competition. Another factor that greatly affects economic growth is the number of government expenditures (Douglas and Williams, 1997). Government investment in businesses and social infrastructures also help economic growth.

By the government having revenue on government investments, the government expenditures will be cut off for certain government projects by using the services and products of the funded institution or business, it also generates more revenue in the process.There are a lot more factors why economies grow, but to summarize, competition, globalization or integrating of local economies in the world market and investment are main factors why economies grow and some don’t.ReferencesBarro, Robert, and Sali-I-Martin, Xavier. (2003). Economic Growth, 2nd ed.

MA: MIT Press.Douglas, Seymour and Williams, Oral. (1997). The Impact of Government Expenditures on Economic Growth. Retrieved July 14, 2009, <http://www.geocities.com/CollegePark/Library/3954/oral.pdf> The World Bank and the International Bank for Reconstruction and Development. (2000). Beyond Economic Growth: Meeting the Challenges of Global Development. Retrieved July 13, 2009, <http://www.worldbank.org/depweb/beyond/beyond.htm> “Competition and Economic Development.” Institute for Strategy and Competitiveness.

Harvard Business School. Retrieved July 14, 2009, <http://www.isc.hbs.edu/economicdevelopment.htm>