How is the economic growth of a country measured?

The economic growth indicates the expansion of the economy that occurs in a country, in terms of quantity and in a given period of time. Broadly speaking, it refers to the increase in economic indicators and the improvement in the population's living standards as a consequence of this increase.

How is the Economic Growth of a country measured?

This expansion is measured as a percentage of increase in GDP (see the GDP components here), Real Gross Domestic Product, and is associated with the country's productivity, it bears a certain relationship with the amount of material goods produced and available and therefore an improvement in the standard of living of the people. However, some economists point out that economic growth depends on GDP per capita, that is, on the income of the inhabitants of a country.

Gross domestic product (GDP) is the value of all goods and services produced by a country at a certain time and at market prices.

In this way, the economic growth it is a variable that increases or decreases as a function of gross domestic product (GDP). If GDP grows at a rate higher than the rate of population growth, it is said that the standard of living of the population increases and that there was a latent growth in the economy. If, on the contrary, the population grows than the GDP growth rate, it is said that the standard of living is decreasing.

This growth can be measured in real or nominal terms, discounting the effects of inflation. If the nominal GDP of a country has increased at a rate of 5% and inflation reaches 4% in the same period, it can be said, in real terms, that the growth rate is 1%.

Economic growth as a goal of a country

This is one of the goals of every country or every society since it not only implies the notable and quantitative increase of the income of the country, but of the way of life that all individuals achieve according to these incomes social.

Among the different tools used to measure the growth of a society to establish how far or near development, are: investment, production of goods and services, increased energy consumption, a trade balance favorable, interest rates, the level of consumption of final products, government policies, saving.

- Short-term objective:

It consists of the country's economy growing in a stable and sustained manner, around its potential capacity (GDP).

- Long-term objective:

It consists of improving the growth potential and increasing the potential GDP, mobilizing the decisive factors for this.

Economic Growth Can Happen in Two Ways

1. a) An economy can grow extensively: It uses more resources in the factors of production.
2. b) An economy can grow intensively: It does so more productively, uses the same amount of resources for production, but with greater efficiency, achieving better results.