Economic growth is the increase in the amount of goods and services produced by an economy. Economic growth can result from a variety of sources, including population growth, the discovery or development of new resources, or an increase in labor productivity.
The most common measure of economic growth is gross domestic product (or GDP). GDP is calculated by adding the total amount of spending by consumers, businesses, and governments in a country over a certain period.
Generally, economic growth is associated with higher incomes and improved standards of living. However, there are concerns about whether growth is sustainable in the long term. Some argue that high levels of growth can cause pollution, global warming, and ozone depletion. Others argue that high rates of growth can lead to dead-end jobs, burnout, and alienation from one’s work.
There are several factors that contribute to economic growth, but one of the most important is technological advance. This is what drives increases in productivity, which in turn drive higher standards of living. Technological advancements can also allow an economy to produce more goods and services without increasing its resource inputs. This is called extensive economic growth.
The other factor is increased labor productivity, which can be achieved by either increasing the number of workers or improving their output. For an economy to achieve this, it must have adequate capital and labor, and it must be able to employ those resources effectively. This is known as productive and allocative efficiency.
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