Economic growth is the increase in the market value of everything a country produces. The macroeconomic statistic used to measure that value is called gross domestic product (GDP). Growth can occur if there’s an increase in the available factors of production—land, labor, capital and entrepreneurship—or when those available resources are put to better use.
An example of this would be adding another chicken to a coop—with two chickens producing about the same number of eggs, adding the second one doubles the total egg output. The same is true for economies: doubling productivity leads to doubled output, and that’s what growth is.
There are several different methods of increasing an economy’s output, but the most important is growth in the productive capacity of the population. This means making it possible to produce more with fewer hours of work.
This can be done by increasing the amount of physical capital goods, like machines or buildings; but it also happens when the tools people use to combine labor and raw materials are improved. For instance, in the 15th century goldsmith Johannes Gutenberg invented a printing press that allowed him to produce one book per day instead of months of effort by hand.
Achieving and sustaining economic growth has been, and will remain, the top priority for elected officials worldwide. To do that, the right mix of policies must be implemented. Faster growth increases the size of the economy, strengthens fiscal conditions and, if broadly shared, raises people’s material standards of living.