Economic growth

An economic growth is the development of activities in the economy that caused the goods and Services are manufactured in the community increase and prosperity of communities increased. The problem of economic growth can be seen as a problem of macro economy in the long run.


Development of the ability of producing goods and services as a result of the expansion of its factors of production in General is not always follow by the increase of the production of goods and services of the same magnitude. Increase the potential of producing often is greater than the value of the actual production. Thus economic growth was slower than its potential.

The source of the increase in economic growth

Gross domestic product (Gross Domestic Product, GDP) is the total market value of the output of a country, which is the market value of all final goods and services produce during a certain time period by production factors locate within a State.

The increase in GDP may arise through:

The increase in the labor supply

Increase labor Supply could produce more output. If the stock of fix capital while labor rising, new workforce tends to be less productive than old labor.

Increase in physical capital or human resources

Capital stock Increase can also raise the output, even if it is not accompanied by an increase in the labor force. Physical capital raising good labor productivity as well as providing valuable services directly. Capital investment in human resources is another source of economic growth.

The increase in productivity

Increases the productivity of the inputs indicates each unit specific input produce more output. Productivity of input can be affect by factors including changes in technology. The advancement of knowledge, and its economic scale of production.

The benefits of economic growth

benefits of economic growth, among others, the following:

The rate of growth to measure economic progress as a result of national development Income per capital is use. To measure the level of affluence of the population. As the per-capital income increases with constant work the higher the level of prosperity of the population and also productivity.

As the basis for making projections or estimates of the acceptance of the State for national development planning or regional. The basis for the determination of priorities the granting of foreign aid the country by the World Bank or other international institutions. As a basis for making business forecasts, particularly the sales equation for companies. To base the preparation of product planning and development.