Economic growth is a rise in the production of goods and services for a country over time, measured by increases in gross domestic product (or GDP). It’s an important measure of the health of economies and an indicator of a nation’s wealth. It’s also an indicator of how widely the fruits of economic growth are shared.
There are many ways to spur economic growth. One is to increase the intensity of output with the same amount of resources, such as by using technology that makes workers more productive. Other ways to spur economic growth include adding new labor by growing the population, gaining access to more natural resources like oil, or creating more infrastructure that allows for more efficient use of existing resources.
The most straight-forward way to spur economic growth is by increasing the available factors of production. This includes land – the soil, crops, and other items grown on it – as well as the human capital that is needed to make all of those things. Economic growth can also happen through the discovery of new resources, such as oil or other natural gas deposits.
The most critical factor to sustainable economic growth is improving productivity. Without higher levels of productivity, it will be harder for countries to continue their economic gains and catch up to the world’s richer economies. McKinsey research shows that boosting productivity can help reduce the gap between Africa’s and the rest of the world’s income per capita.
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