What is Economic Growth?

Economic Growth – The strictest definition of economic growth is the one that indicates that there is an increase in terms of income or goods and services that the economy of a territory produces in a given time, generally measured in years.

The concept of income can include within this definition many other economic indicators of well-being of any country or region. Aspects such as the level of savings or investment of its citizens and its trade balance are some that are commonly taken into account when studying economic growth. Having said that, the most used meter to measure the economic evolution is usually the fluctuations of the  GDP  (Gross Domestic Product)  of the analyzed country.

Economic Growth Theory

The economic studies that have tried to define this phenomenon are included in the theory of economic growth and focus on the study of the improvements experienced by economies in a given number of years, which usually extends over the long term. For the short term there is the business cycle theory  .

Through the study of economic growth, many other aspects of the productive life of an economy are observed, focusing on its productive level, the quality of education provided to its citizens, its mortality and birth rates or life expectancy in its population. region.

Economic Growth Factors

Over centuries of economic research, various models of economic growth and its causes have been developed. These are useful simplifications of reality to find explanations about how the economy grows and the reasons for its changes. The general idea that can be extracted from them identifies certain factors as key to economic growth:

• Invest in capital: the key to a productive workforce in better conditions and with more tools.

• Education: Or, what is the same, investment in human capital that provides the participants in the production process with training that helps them increase their production with the same resources and be more efficient.

• Technology: important in the sense that it contributes to the development of working models, tools and means of production and research.

Why does it Matter?

When an economy grows, the value of goods and services that its citizens can consume and enjoy increases. However, economic growth alone does not necessarily translate into improvements in the well-being of the entire population, unless it is sustained and redistributive.

Considering

1) That economic growth, as defined in standard economics textbooks, is an increase in the production and consumption of goods and services;

2) That when the set of the number of inhabitants and the level of consumption per capita increases, this results in economic growth;

3) That the global economy grows as a unified whole composed of agricultural, extractive, industrial and service sectors which need to dispose of material resources and generate waste;

4) That economic growth is often and generally indicated by an increase in real gross domestic product (GDP) or real gross national product (GNP);

5) That economic growth has long been a primary objective of many societies and most governments;

6) That economic growth has a limit if we take into account the already firmly established physical and ecological principles;

7) That there is increasing evidence that global economic growth is having negative effects on our long-term economic and ecological well-being.

Abstract

Currently, the concepts of [economic growth] and economic development are the subject of frequent discussions when they are used to characterize and qualify the changes that occur in the economy of a country or a given region. Although, the purpose of this article is to compare the similarities and differences between the two concepts used using the Pareto chart. Such an analysis was supported by contributions from Solow (1956), Kuznets (1966), Myrdal (1974), Mahbub (1987), Todarov (1988), Meadows (1993), Mesarovic (1997), Sen ( 1997). 1999) and Lauchlin (2012), among others, who provided definitions. Research of the descriptive documentary type. Among the results of development, it is said that economic strategies are being transformed to transform reality and also to achieve the satisfaction of the needs of the population for the enjoyment of life. And also growth is evidenced by an increase in revenue and the cost of goods and services, as well as an increase in products and services. It is concluded that in the dynamism of the national and international economy, these two definitions represent similarities, but also differences that go hand in hand, keeping each of them in their own space.