Economic growth refers to the increase in the production of goods and services in an economy

over a period of time. It is typically measured as the percentage increase in real gross
domestic product (GDP), which is adjusted for inflation. Economic growth indicates a higher
level of economic activity and prosperity.

Key Concepts

1. Definition:
o Economic growth is an increase in the amount of goods and services produced
per head of the population over a period of time
2. Measurement:
o It is measured by the growth rate of real GDP, which reflects the value of all
final goods and services produced within a country in a given period, adjusted
for inflation
3. Determinants of Economic Growth:
o Capital Goods: Investments in machinery, infrastructure, and technology.
o Labor Force: Increase in the number of workers and improvement in their
skills (human capital).
o Technology: Innovations and improvements in technology that enhance
productivity.
o Human Capital: Education and training that improve the efficiency and
productivity of the workforce.
4. Types of Economic Growth:
o Actual Growth: An increase in the real output of an economy over time.
o Potential Growth: An increase in the economy's ability to produce goods and
services, represented by an outward shift of the production possibility frontier
5. Factors Influencing Economic Growth:
o Natural Resources: Availability and exploitation of natural resources.
o Political Stability and Good Governance: Policies and governance that
encourage investment and economic activity.
o Economic Policies: Fiscal policies, monetary policies, and trade policies that
support growth.
o Infrastructure Development: Availability of efficient transportation,
communication, and energy systems

Impacts of Economic Growth

1. Positive Impacts:
o Higher income levels and improved standards of living.

o Increased employment opportunities.

 o Enhanced public services and infrastructure.
o Greater investment in education, health, and technology.
2. Negative Impacts:
o Environmental degradation due to increased industrial activity.
o Inequality, if the benefits of growth are not evenly distributed.
o Over-reliance on non-renewable resources, leading to sustainability issues