Unit 4.1 - Economic Growth, Development and Capital Formation
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CONCEPT OF ECONOMIC GROWTH & DEVELOPMENT Concept of Economic Growth Economic growth is defined as the sustained annual increase in productive capacity of an economy over time. It is quantitative term as it represents quantitative increase in the final output (GDP, GNP, NNP, PCI) of goods and services in an economy over time. It can be measured in both nominal and real values. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP). World Bank uses GNP as indicators of measuring economic growth. However, GDP is considered as one best measuring indicators of economic growth.