Concept of Economic Growth

• • Economic growth refers to an increase in the size of a country’s economy over a period of time.
  • The economy is measured in terms of change in output or GDP.
  • Economic growth can be measured in ‘nominal’ or ‘real’ terms based on current prices or constant prices.
  • Thus, economic growth is an indicator about the increase in factors of production which include land, labour, capital and entrepreneurship.
  • Economic growth is commonly modelled as a function of physical capital, human capital, labour force, and technology.
  • It is a flow variable and is measured over a period of time (monthly, quarterly, yearly etc) and measures short-term change in parameters.
  • It is a quantitative increase in the growth parameters.

Measures of economic growth

1. Economy Growth Rate = Change in GDP/ Last year GDP *100

2. Per Capita Income = National Income/ total population