Economic growth

growthGDP growthgrowth rategrowth theoryGrowth economicseconomic growth rateeconomicgrowth ratesmarket growthAnnual average GDP growth
Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time.wikipedia
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macroeconomicmacroeconomistmacroeconomic policy
This and other observations have lead some economists to view GDP growth as the most important part of the field of Macroeconomics:
While macroeconomics is a broad field of study, there are two areas of research that are emblematic of the discipline: the attempt to understand the causes and consequences of short-run fluctuations in national income (the business cycle), and the attempt to understand the determinants of long-run economic growth (increases in national income).

National accounts

national accountingnational accountGovernment accounting
Measurement of economic growth uses national income accounting.
Economic data from national accounts are also used for empirical analysis of economic growth and development.

Robert Solow

Robert M. SolowSolowR. M. Solow
"In a famous estimate, MIT Professor Robert Solow concluded that technological progress has accounted for 80 percent of the long-term rise in U.S. per capita income, with increased investment in capital explaining only the remaining 20 percent."
Robert Merton Solow, GCIH (born August 23, 1924), is an American economist, particularly known for his work on the theory of economic growth that culminated in the exogenous growth model named after him.

Industrial Revolution

industrialindustrialismindustrial era
The rapid economic growth that occurred during the Industrial Revolution was remarkable because it was in excess of population growth, providing an escape from the Malthusian trap.
GDP per capita was broadly stable before the Industrial Revolution and the emergence of the modern capitalist economy, while the Industrial Revolution began an era of per-capita economic growth in capitalist economies.


Before industrialization technological progress resulted in an increase in the population, which was kept in check by food supply and other resources, which acted to limit per capita income, a condition known as the Malthusian trap.
As industrial workers' incomes rise, markets for consumer goods and services of all kinds tend to expand and provide a further stimulus to industrial investment and economic growth.


productiveproductivity growtheconomic productivity
Increases in labor productivity (the ratio of the value of output to labor input) have historically been the most important source of real per capita economic growth.
Labour productivity is a revealing indicator of several economic indicators as it offers a dynamic measure of economic growth, competitiveness, and living standards within an economy.

Business cycle

economic boomboomboom and bust
Short-run variation in economic growth is termed the business cycle.

Moore's law

Moore’s Lawcomputational powermass-produced
US productivity growth spiked towards the end of the century in 1996–2004, due to an acceleration in the rate of technological innovation known as Moore's law.
Moore's law describes a driving force of technological and social change, productivity, and economic growth.


In economics and economic history, the transition to capitalism from earlier economic systems was enabled by the adoption of government policies that facilitated commerce and gave individuals more personal and economic freedom.
Over time, capitalist countries have experienced consistent economic growth and an increase in the standard of living.

Market value

carrying valuemarketmarket cap
Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time.
Stability and economic growth are two factors that international investors are seeking when considering investment options.

Eric Hanushek

Eric A. HanushekDr. Eric HanushekHanushek, Eric A.
Eric Hanushek and Dennis Kimko introduced measures of students' mathematics and science skills from international assessments into growth analysis.
In his most recent book, The Knowledge Capital of Nations, Hanushek concludes that the quality of education is causally related to economic growth.

Endogenous growth theory

endogenous growthRomer Modelendogenous
Unsatisfied with the assumption of exogenous technological progress in the Solow–Swan model, economists worked to "endogenize" (i.e., explain it "from within" the models) productivity growth in the 1980s; the resulting endogenous growth theory, most notably advanced by Robert Lucas, Jr. and his student Paul Romer, includes a mathematical explanation of technological advancement.
Endogenous growth theory holds that economic growth is primarily the result of endogenous and not external forces.


inflation rateprice inflationfood inflation
Growth is usually calculated in real terms - i.e., inflation-adjusted terms – to eliminate the distorting effect of inflation on the price of goods produced.
Unless the economy is already overinvesting according to models of economic growth theory, that extra investment resulting from the effect would be seen as positive.

Human capital

human capital theorycapitalhuman
Many theoretical and empirical analyses of economic growth attribute a major role to a country's level of human capital, defined as the skills of the population or the work force.
Some contemporary growth theories see human capital as an important economic growth factor.

Daron Acemoglu

Daron AcemoğluAcemogluAcemoglu, Daron
According to Daron Acemoglu, Simon Johnson and James Robinson, the positive correlation between high income and cold climate is a by-product of history.
His research includes a wide range of topics, including political economy, human capital theory, growth theory, economic development, innovation, labor economics, income and wage inequality, network economics, etc. He noted in 2011 that most his research of the past 15 years concerned with what can be broadly called political economy.

Big push model

Big Pushtheory of the big push
One popular theory in the 1940s was the big push model, which suggested that countries needed to jump from one stage of development to another through a virtuous cycle, in which large investments in infrastructure and education coupled with private investments would move the economy to a more productive stage, breaking free from economic paradigms appropriate to a lower productivity stage.
He supports this argument by stating that the social marginal product of an investment is always different from its private marginal product, so when a group of industries are planned together according to their social marginal products, the rate of growth of the economy is greater than it would have otherwise been.

Gross domestic product

GDPnominal GDPGDP (nominal)
It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP.


Research done in this area has focused on what increases human capital (e.g. education) or technological change (e.g. innovation).
Another example involves business incubators – a phenomenon nurtured by governments around the world, close to knowledge clusters (mostly research-based) like universities or other Government Excellence Centres – which aim primarily to channel generated knowledge to applied innovation outcomes in order to stimulate regional or national economic growth.


People's Republic of ChinaChineseCHN
In contrast growth in Asia has been strong since then, starting with Japan and spreading to Korea, China, the Indian subcontinent and other parts of Asia.
According to the IMF, China's annual average GDP growth between 2001 and 2010 was 10.5%.

Income distribution

distribution of incomeincomedistribution
The modern perspective which has emerged in the late 1980s suggests, in contrast, that income distribution has a significant impact on the growth process.
Important theoretical and policy concerns include the balance between income inequality and economic growth, and their often inverse relationship.

Steady-state economy

steady-state theoristSteady state economysteady state
In academia, concepts like uneconomic growth, steady-state economy and degrowth have been developed in order to achieve this.
A steady-state economy is not to be confused with economic stagnation: Whereas a steady-state economy is established as the result of deliberate political action, economic stagnation is the unexpected and unwelcome failure of a growth economy.

Robert Lucas Jr.

Robert Lucas, Jr.Robert LucasRobert E. Lucas
Unsatisfied with the assumption of exogenous technological progress in the Solow–Swan model, economists worked to "endogenize" (i.e., explain it "from within" the models) productivity growth in the 1980s; the resulting endogenous growth theory, most notably advanced by Robert Lucas, Jr. and his student Paul Romer, includes a mathematical explanation of technological advancement.
They have collaborated in papers on growth theory, public finance, and monetary theory.

Economies of scale

economy of scalescaleeconomics of scale
Criticisms of classical growth theory are that technology, an important factor in economic growth, is held constant and that economies of scale are ignored.
Learning and growth economies are at the base of dynamic economies of scale, associated with the process of growth of the scale dimension and not to the dimension of scale per se.

Creative destruction

Schumpeterian growthmutation
A major model that illustrates Schumpeterian growth is the Aghion–Howitt model.
In Schumpeter's vision of capitalism, innovative entry by entrepreneurs was the disruptive force that sustained economic growth, even as it destroyed the value of established companies and laborers that enjoyed some degree of monopoly power derived from previous technological, organizational, regulatory, and economic paradigms.

Club of Rome

The Club of Romett30tt30 Club of Rome
Critics such as the Club of Rome argue that a narrow view of economic growth, combined with globalization, is creating a scenario where we could see a systemic collapse of our planet's natural resources.
Published in 1972, its computer simulations suggested that economic growth could not continue indefinitely because of resource depletion.