Economic growth means a country’s economy is growing and producing more goods and services. This can be a good thing for a nation, especially in underdeveloped or developing economies where economic growth can drastically improve living standards and lift people out of poverty.
A number of factors can contribute to economic growth. One important factor is investment, which is spending that increases the long-term productive capacity of an economy. This can include building new houses and offices, purchasing machinery and equipment and undertaking research and development projects. Investment can be encouraged by government policies such as lower taxes and subsidies for investments.
Another factor is productivity, which refers to the efficiency with which a country uses its resources to produce goods and services. Productivity can be improved through better technology, training employees and reallocating resources from less-productive to more-productive uses. The more efficient an economy is, the higher its economic growth rate.
Economic growth can be a result of a number of factors, such as increased consumption and higher savings by households or businesses, and rising productivity. The latter can be a result of new technologies, improvements in labour and capital productivity, and increasing demand for certain goods or services. An economic expansion can also be a result of increasing population, which expands the number of people working in an economy and can increase productivity through increased labor supply. Economic expansions can also occur if a country has access to natural resources that can be exploited economically, such as oil and minerals.