Concept of Economic growth

economic-growth

The increase in the productive capacity of an economy over a period of time is known as economic growth. It is a quantitative term as it represents a quantitative increase in the production of goods and services in an economy over a period of time.

According to M.P Todaro, “ Economic growth is the steady process by which productive capacity of an economy increases over time to bring about rising levels of national output and income.”

According to it Edward Shapiro, “ Economic growth can be defined as the increase in the economy’s output over time.”

According to P.A.Samuelson and W.D. Nordhaus, “ Economic growth is an increase in total output of a nation over time.”

So, economic growth means more production of goods and services in the economy. It is measured in terms of an increase in real GDP over time for an increase in the per capita income. Economic growth is a narrow concept as compared to economic development because it is only an increase in the real GDP of an economy.

The economic growth of a country is determined by the factors like quality and quantity of natural, capital, and human resources, state of technology, existing socio-economic infrastructures, etc. Higher quality and quantity of human and natural resources, progress in technology, higher savings and investments, etc cause higher economic growth in the country. The rapid economic growth rate achieved by the countries like South Korea, Vietnam, China, etc is due to the development of education, infrastructure, industries, political stability, improvement in technology, etc.

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