Economic Growth

Economic growth is a sustained increase in an economy's real output, usually measured as the rise in real GDP or real GDP per capita.

Human capital is the knowledge, skills, and health embodied in workers that make them more productive.

Physical capital is the stock of manufactured tools, machinery, equipment, and structures used to produce goods and services.

Productivity is the amount of output produced per unit of input, most often output per worker or per hour worked.

The catch-up (convergence) effect is the tendency for poorer economies to grow faster than rich ones because capital has higher returns where it is scarce.

The aggregate production function links an economy's total output to its inputs, physical capital, labor, human capital, and technology, at the economy-wide level.

Growth accounting decomposes the growth of output into contributions from capital, labor, and total factor productivity (the Solow residual).

The Malthusian trap is a cycle in which any gain in output per person is absorbed by population growth, pushing living standards back down to subsistence.

Infrastructure investment is spending on long-lived public capital, such as roads, ports and power grids, that lowers costs across every industry using it.

Creative destruction is the process by which new products and methods displace older ones, so productivity rises only by destroying existing firms and jobs.

The Solow growth model shows diminishing returns to capital push an economy to a steady state, so lasting growth per worker needs technological progress.

Endogenous growth theory models long-run growth as the result of choices inside the economy, such as research and human capital, not outside technical change.

Malinvestment is capital sunk into projects that look profitable only because interest rates or price signals are distorted, and that fail when they correct.

Capital deepening is an increase in the stock of physical capital per worker, which raises labor productivity and output per worker.