Economic growth is an economy's increase in the production of its goods and services, as well as its technological changes and advancements. It is the increase of a country’s national income and can be measured by long-term growth or short-term growth. Economic growth can be measured nominall, or in real terms, which adjusts for inflation.
It is usually measured in real gross domestic product (real GDP) because GDP measures the total final value of all goods and services produced domestically in an economy. We can track growth by looking at the growth of GDP. The progress of economic growth usually follows a cyclical pattern, where a economy can experience a sudden growth or boom, followed by a decline in GDP. This is called the business cycle and these ups and downs are usually considered part of the short run growth path. More importantly, one must consider the long run growth path that these cycles follow; do they trend upward or downward over logn periods of time?
India and China are examples of countries whose economies had a surge in economic activity. Although they both started at around the same point, we can see in the last 30 years, China has experienced an incredible amount of economic growth without any precedent in history. On the other hand, India has stagnated with little to no economic growth in the last 30 years.
With the advantages of economic growth, there are still some disadvantages that follow. If short run economic growth strays too far from the long run path there is risk of hyperinflation as an economy's growth becomes uncontrolled. Economic growth can also create negative externalities such as pollution, which becomes an environmental concern. For example, China is often criticized for having large negative impacts on the environment because it is growing too quickly. Even though environmental growth and with economic development share similar outcomes, it is important to remember that the two are separate.© BrainMass Inc. brainmass.com July 31, 2021, 2:59 pm ad1c9bdddf