Economic Growth Retains the Favorable Share of the Gross Domestic Product

Economic growth is the improvement in the creation of goods and services, relative to one point in time, in comparison to the previous period of time. It can be measured either in real or nominal (in constant prices) terms. Nominal economic growth measures the change in market prices of goods and services. Real economic growth measures the improvement in standard of living over a given period. The concept of economic growth has been around since the inception of economics.

Growth in output pertains to the improvement in the standard of living. The concept of economic growth as measured by gross domestic product is popularly used in the United States. This is the measure of overall economic activity through the gross domestic product. Other countries have also used this measure of overall economic activity, to a certain extent. The concept of Gross Domestic Product has also been applied in international comparisons.

The concept of Gross Domestic Product involves the measurement of production based on a particular industry. The idea behind this measure of overall economic activity is that if there is positive economic growth then the unemployment rate should fall and the output should increase. When the output increases then so does the employment rate. To measure unemployment, therefore, it is necessary to consider both employment and production.

Economic growth, according to some analysts, is the increase in national income realized through the output of various individuals and businesses. According to these analysts, the productivity of the economy is determined by the level of productivity of capital goods produced by workers. A high level of productivity is only possible if the economy has access to advanced technology. Hence, the productivity of the economy is also an important determinant of economic growth.

The analysis shows that the productivity of capital goods like machines and plant, has been consistent during the past years. But, it has declined over time as a result of technological advances. It is believed that the only way to increase production is by improving the productivity of human work force. Only through the use of advanced techniques can human beings perform the productive tasks of their trade and contribute to the overall economic growth.

Technological change is playing a critical role in determining the level of economic growth. Experts believe that there should be major investments in R&D and other research and development activities that will improve the productivity of the economy. In fact, the present situation is indicating that there is a dearth of human capital with the necessary skill set to ensure high levels of productivity. A rise in the unemployment rate and faltering economic growth are evident outcome of these deficiencies. It is necessary therefore, for economic growth to be accelerated by undertaking extensive research and development activities at both the national and the global levels.

Rapid economic growth enables the country to adopt new technologies and improve existing processes, thus contributing to higher living standards. Advanced machinery and appliances help to create more economic output per unit of input. The consistent increase in real gDP per unit of input enables the economy to attain higher living standards, with a growing population. Real gDP per unit of output is the measure of economic welfare using available resources.

Economic growth can only be pursued if the productive capacities of the economy are improved. Labor force participation and its quality are an essential determinant of levels of economic growth. There are a marked improvement in the employment rate and an increase in the number of employees is only possible when there is a boost in productivity. A large number of companies are focusing on automation of different processes to facilitate enhanced levels of economic growth.