Economic growth is the increase in the total value of goods and services produced in a country over time. It is commonly measured in terms of per capita gross domestic product (GDP). Economic growth can be a result of an increase in labor productivity, capital investment or technological change. It can also be the result of a reduction in imports or an increase in exports. Regardless of the cause, economic growth is usually positive and it can lead to improved living standards.
Economic Growth
The most common way to generate economic growth is through labor. This can be done through native population growth or immigration, or through business investment in the production of goods and services such as factories and offices. Economies of scale and the ability to spread development costs over large output quantities can drive fast economic growth.
Alternatively, economic growth can occur due to an expansion of the country’s physical capital stock. This can be done by building new infrastructure or investing in the purchase of more equipment or machinery. Increased use of capital can also improve the efficiency with which a country produces its goods. For example, increased capital investments can reduce the amount of labor needed to produce one product, which in turn frees up that labor for producing other goods.
Some economists argue that economic growth is desirable for all countries. They say that it increases the standard of living, helps reduce poverty, and provides more leisure opportunities. They further claim that it increases wealth and allows people to invest in the things they want. Proponents of economic growth have been criticized for ignoring environmental concerns and concerns about inequality.
