Economic Growth
Plain definition
Economic growth is a sustained increase in a country's productive capacity and output over time, typically measured as the rise in real GDP or real GDP per capita. It reflects an economy producing more goods and services — driven by more labor, more capital, or better technology and productivity.
In economics
Growth is the central goal of macroeconomic policy because it funds rising living standards, employment, and tax revenue. Classical drivers include capital accumulation, labor force expansion, and total factor productivity. Endogenous growth theory emphasizes innovation and human capital, while catch-up (convergence) theory predicts poorer economies can grow faster by adopting existing technology. Growth does not automatically mean broader well-being — distribution and sustainability matter too.
Example
An economy whose real GDP per capita grows 2% per year will double its average living standard in about 35 years (the rule of 70: 70 / 2 = 35). A country growing at 7% per year doubles in just 10 years — this compounding is why small differences in growth rates transform nations over a generation.
Economic growth is often confused with economic development. Growth means more output (a bigger pie); development means better lives — health, education, institutions, and equality (a better pie). A country can grow rapidly while inequality widens or the environment degrades, so growth and development are related but distinct.