Economic Growth Frederick University 2014
Definitions • Economic growth – an increase in the potential of the economy to produce • Economic growth – a shift in the institutional PPF • Economic growth – a shift in the LRAS curve • Economic growth – an increase in the potential GDP
Conditions for Economic Growth • natural conditions • institutional conditions • political conditions • foreign environment
Factors of Economic Growth • quantity and quality of labor force • quantity and quality of capital • technological, structural and organizational changes in the economy.
Types of Economic Growth • Extensive growth • Intensive growth
Indicators of Economic Growth • rate of growth – the percentage increase in GDP • percentage increase in GDP per capita • increase in the rate of employment • percentage increase in fixed investment • increase in labor productivity
Actual vs. Potential Growth • Actual growth – actual increase in GDP • Potential growth – increase in the estimated potential GDP