Importance and Components of Economic Environment


What is Economic Environment?

Economic environment means the factors that affects economic conditions of the country. Economic Environment includes Gross Domestic Product, Income level at national level and per capita level, Profit earning rate, Productivity and Employment rate, Industrial, monetary and fiscal policy of the government etc.

Components of Economic Environment

  • Role of Private and Public sector matters a lot in order to get investment. Because when the investors invest money, they see industry growth and the role of private sectors in the economy.
  • Rate of growth of GDP, GNP, and Per Capita Income, When the gross domestic product of the economy increases, it brings investment in the economy and show the growth of the economy to the investors.
  • Transport and Communication System helps to increase the growth of the economy. When the transport system will be good, it will increase the finished goods. When the communication system will effective, it will connect more people and will give them opportunities to do more business.
  • International Debt also matters in the growth of the economy. if the economy has more international debt, then the investors afraid to invest in the economy and vice-versa.