What Are The Different Theories Of Economic Growth?
Let us begin with a careful definition of exactly what we mean by economic growth: Economic growth represents the expansion of a country’s potential gross domestic product or national output. Put differently, economic growth occurs when a nation’s production possibility frontier shifts outward. A closely related concept is the growth rate of output per person. This determines the rate at which the country’s standard of living is rising. What are the long-term patterns of economic growth in high-income countries? The history of economic growth since 1870 for 16 high-income countries including the major countries of North America and Western Europe, Japan, and Australia. We see the steady growth of output over this period. Even more important for living standards is the growth in output per hour worked, which moves closely with the increase in living standards. Over the entire period, output per worker is grown by an average rate of 2.4 percent annually, which compounds to a growth by a
