Economic growth rate is a measure of how quickly a country’s GDP is increasing. It is typically measured as a percentage and is a key indicator of a country’s overall economic performance.

Formula:

Economic growth rate = (GDP at current prices in the current year - GDP at current prices in the previous year) / GDP at current prices in the previous year * 100%

Key factors influencing economic growth rate:

• Technological innovation: New technologies can increase productivity and efficiency, leading to economic growth.
• Investment: Investment in infrastructure, equipment, and human capital can boost production and consumption.
• Government spending: Government spending on infrastructure, education, and social programs can stimulate demand.
• Consumer spending: Consumer spending on goods and services can drive economic growth.
• Export competitiveness: Exports can create demand for a country’s goods and services in international markets.
• Global economic conditions: Global economic conditions, such as trade policies and commodity prices, can affect a country’s growth.

Measuring economic growth:

• GDP: Gross domestic product (GDP) is the total value of all goods and services produced within a country in a particular period.
• GDP per capita: GDP per capita is GDP divided by the population.
• Growth rate: The percentage change in GDP over time.

Examples:

• If a country’s GDP increases from $10,000 in 2020 to $12,000 in 2021, the economic growth rate is 20%.
• If a country’s GDP per capita increases from $5,000 in 2020 to $6,000 in 2021, the economic growth rate per capita is also 20%.

Importance:

• Economic growth rate is an important indicator of a country’s economic well-being and prosperity.
• It is used to measure the performance of a country’s economy and to forecast future growth.
• It is used to guide policy decisions and to assess the effectiveness of economic policies.