Economic growth is the increase in the real value of goods and services in a country over a period of time, measured in terms of an economy’s gross domestic product (GDP). The benefits of economic growth are undeniable. They include better living standards, longer lives and more opportunities for everyone to fulfill their needs. They also translate into higher tax revenues for governments, helping them to provide more public goods and services.
The growth of the global economy in recent decades has transformed our world. It has made many basic things more affordable, including food, electricity and healthcare. It has lifted billions of people out of poverty, making it possible for them to live a decent life.
However, despite the tremendous benefits of economic growth, it isn’t a panacea. The indiscriminate use of fossil fuels in the pursuit of growth creates pollution, climate change and other problems. In addition, inequality has grown and threatens to erode the gains of economic growth.
A more sustainable form of long-term growth is to make better use of existing resources, thus increasing productivity. This can be achieved by investing more in physical capital or labor, or by using technology to improve the efficiency of those inputs. The latter approach is exemplified by a computer built today, which requires much the same inputs as one built 10 years ago, but yields more output than older computers. This type of innovation is key to the long-term sustainability of economic growth.
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