Economic growth is the increase in the amount of goods and services produced by a country in one year. This includes the goods and services produced by workers, machines, and animals in addition to money from business investment and government spending. It can have many positive effects on people and the economy. Economic growth can mean higher incomes which can result in increased purchasing power, better access to healthcare and education, and a greater sense of wealth and well-being. It can also result in a virtuous cycle of economic growth encouraging more investment in the economy, which leads to further economic growth.

Economic Growth is usually measured by the Gross Domestic Product (GDP), which includes all market activity within a country’s borders. However, GDP does not tell us how much of the new income from growth is shared amongst citizens or whether it is spent on merit goods such as health care and education, or on public goods such as infrastructure. Rising GDP may also lead to a tax dividend; as incomes and consumption rise, people will pay more taxes, which the government can use to reduce its debt or invest in public goods such as schools and hospitals.

Some economists argue that economic growth is essential to improving the standard of living of global citizens. For example, the IMF states that “economic growth is an important means to reducing poverty and increasing prosperity for all”. However, critics of economic growth point to the fact that it can lead to an increase in inequality, environmental damage, and social unrest. They may also assert that economic growth is not sustainable and will eventually run out of natural resources.