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How Do Countries Achieve the Highest GDP?

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  • Written By: Jan Fletcher
  • Edited By: Jessica Seminara
  • Last Modified Date: 18 March 2014
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A nation's gross domestic product (GDP) may be raised through policies that help ensure stable conditions, enact controls over capital markets, or restrain military spending. Efforts to educate and equip a modern workforce may also help a nation achieve the highest GDP possible. Statistical data such as the GDP may figure prominently as a measurement of a nation's overall quality of life. The standard of living in a country may also be raised by a vigorous trading policy at both local and national levels.

Stable conditions at the national level are often considered to be a critical factor in attaining the highest GDP. Peacetime conditions usually result in investor confidence, as capital investments may take years to plan and build before significant wealth is generated. In addition, armed conflict, insufficient policing, and natural disasters can all negatively impact a nation's productivity.

Controls over capital markets are another factor that nations use to achieve the highest GDP rates. Since history demonstrates that people are prone to succumbing to both speculative episodes and unscrupulous financiers, governments typically step in with some form of regulation over capital markets. Consumer protection laws have been enacted in some countries to prevent victimization of consumers. Such laws may also bestow greater confidence in a market, leading investors to increase capital investment within a nation.

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Extreme regulation can have a negative impact at times. This is demonstrated in those countries in which citizens have been victimized by an extremist government that may enact draconian laws tightly regulating buying and selling. Such efforts can backfire, and often result in a lower standard of living.

Educational investment may also be used as a method of achieving the highest GDP. In general, the more educated the populace, the greater the productive capacity of a nation becomes. A vigorous trading policy is another factor that may increase a nation's wealth. Legislation may impact trading policies. Sometimes laws can be detrimental to a nation's GDP, as when a country pursues an isolationist strategy that limits free trade.

Some economists believe that restraining military spending is a good way to stimulate the economy, but others have disputed this. The disruption of a war may impact a nation's GDP for years, due to the decrease in manufacturing capacity, as well as the loss of human life and limb. Vigorous trading is a goal of many nations, as the flow of capital throughout the monetary system allows for increasing investments in both production capacity, and human intellectual achievements. Nations that possess larger numbers of engineers, teachers, and other trained professionals tend to have the highest GDP values among the economies of the world.

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