Economic growth is an important topic to economists, because it means that people and companies are earning more money and feeling better off. If growth is slow or stalls, people and businesses will spend less and may even cut jobs. This can lead to a recession, which is a severe downturn in the economy. In the past, governments have used fiscal stimulus programs to jump-start economic growth when it falters.

The key factors in economic growth are physical capital, human capital, and labor productivity. Increased capital leads to increased output, which is measured as gross domestic product (GDP). Increases in labor productivity — the ability of workers to produce more per hour — are also important for economic growth. Improvements in technology are another driver of economic growth. For example, a computerized tax-filing system can do more work in less time than handwritten forms.

Increasing economic growth has been a major policy goal for countries around the world. For example, China has achieved rapid economic growth and has quadrupled GDP since 2000. This growth has helped reduce poverty in many countries and improved working conditions for people.

However, achieving high economic growth isn’t easy. Countries need to increase labor and production, invest in infrastructure, and reform their policies. But most of all, they need to make sure that the economy isn’t overusing resources or producing too much pollution. The future of economic growth is uncertain, particularly for developing countries, which are facing higher-for-longer interest rates, debt sustainability risks, and worsening climate shocks.