Economic growth is the increase in the market value of the goods and services produced by an economy over time.
It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP.
Of more importance is the growth of the ratio of GDP to population (GDP per capita), which is also called per capita income.
An increase in per capita income is referred to as intensive growth.
GDP growth caused only by increases in population or territory is called extensive growth.
Growth is usually calculated in real terms -- i.e., inflation-adjusted terms -- to eliminate the distorting effect of inflation on the price of goods produced.
In economics, "economic growth" or "economic growth theory" typically refers to growth of potential output, i.e., production at "full employment."
As an area of study, economic growth is generally distinguished from development economics.
The former is primarily the study of how countries can advance their economies.
The latter is the study of the economic aspects of the development process in low-income countries.
Since economic growth is measured as the annual percent change of gross domestic product (GDP), it has all the advantages and drawbacks of that measure.
For example, GDP only measures the market economy, which tends to overstate growth during the change over from a farming economy with household production.
An adjustment was made for food grown on and consumed on farms, but no correction was made for other household production.
Also, there is no allowance in GDP calculations for depletion of natural resources.