How high can Hungary's sustainable growth rate be? I. Theoretical questions about sustainable economic growth
The central question with sustainable economic growth is what rate can be achieved in the long term alongside internal and external equilibrium and without irreparable harm to the natural environment. At a given employment level, the growth rate is ultimately determined by technical development, but the rate is not irrespective of the proportion of investment. But a reverse relation applies here. Rather than the rate being arrived at from the investment ratio, but it determines the proportion of investment to GDP - through the general and marginal levels of capital efficiency. This brings to the fore the questions of investment funds and domestic savings, the external sources. Countries catching up with the developed economies usually suffer from a funding shortage, due to a number of factors, which gives special importance to investment efficiency and factors that increase internal sources and improve efficiency. A salutary role in these is played by reforming the system of institutions and developing human capital. The links make clear that the growth rate can be understood from the system of internal and external conditions - growth is endogenous in nature. The study underlines theoretical connections that help to determine the growth potential of the Hungarian economy.
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