Literature Review

Investment and Economic Growth

Investment is an essential driver of a country’s economy as it not only encourages the building up of economic resources but because it also opens up a region to external stakeholders. Setting up a region or a country for economic growth not only requires investment in the capital but it also requires the input of human resources (Ansar et al., 2016, Iamsiraroj, 2016). Countries that have experienced tremendous economic growth are those that have focused on investment and how to improve asset by investing further.

Experiencing steady growth for any sector in the economy requires an interplay of the different factors of production available (Iamsiraroj & Ulubaşoğlu, 2015). Economic growth cannot be felt if individuals shy away from saving and investing as these two are the bedrock to sustainable growth. Modern day economists argue that a country’s economic growth is directly proportional to the amount of capital and resources invested in it. Productivity, especially for natural resources, can only be enhanced by allowing capital investments (Iamsiraroj & Ulubaşoğlu, 2015).

In as much economic growth of a country or a people cannot be attained without the interplay of other factors and parameters, it is important to note that investments are the most significant factor in matters of economic growth. According to Iamsiraroj understanding, the dynamics of wealth creation through investments is an essential aspect that could be used to ensure that capital invested results in economic growth.

Natural Resources and Economic Growth

Majority of global economies are dependant on natural resources for wealth creation and economic growth. The presence of natural resources means that a country or an economy can engage in commercialisation or industrialisation by maximising on the available natural resources (Badia-Miró, 2015). Badia-Miró believes that it is essential to understand that natural resources cannot merely translate to economic growth if they are not utilised in the right way.

Natural resources tend to possess high economic value; however investment in capital is prerequisite in turning them to become a pipeline for economic growth (Badia-Miró, 2015).   Several countries like the Democratic Republic of Congo, Iraq and  Iran are examples of countries with large quantities of natural resources, but imprudent use and exploitation of thse resources has not helped the countries in terms of economic growth (Badia-Miró, 2015).  Natural resources could be used to guarantee financial assistance for countries and at the same time attract foreign direct investments especially if value addition is involved.

According to Venables (2016) Matters of economic growth cannot be entirely be associated with natural resources as we have a majority of nations that do not have such resources but continue to be leaders in matters of economic growth (Venables, 2016). Formulation of sound policies that lead to improvement and protection of the natural resources could be important in guaranteeing a country continuous economic growth from the resources.

References

Ansar, A., Flyvbjerg, B., Budzier, A., & Lunn, D. (2016). Does infrastructure investment lead to economic growth or economic fragility? Evidence from China. Oxford Review of Economic Policy, 32(3), 360-390.

Iamsiraroj, S., & Ulubaşoğlu, M. A. (2015). Foreign direct investment and economic growth: A real relationship or wishful thinking?. Economic Modelling, 51, 200-213.

Iamsiraroj, S. (2016). The foreign direct investment–economic growth nexus. International Review of Economics & Finance, 42, 116-133.

Badia-Miró, M., Pinilla, V., & Willebald, H. (Eds.). (2015). Natural resources and economic growth: learning from history(Vol. 72). Routledge.

Venables, A. J. (2016). Using natural resources for development: why has it proven so difficult?. Journal of Economic Perspectives, 30(1), 161-84.

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