Economic growth increases the amount of goods and services people produce for themselves. This may be achieved by adding physical capital or labor, increasing the number of workers, or improving productivity. For example, the invention of the printing press in the 16th century allowed a single worker to produce several books in a day. This increased the availability of books, which improved living standards for many people.

The most common measure of economic growth is gross domestic product (GDP). GDP includes consumer spending, business investment, government spending, and net exports.

Generally, faster economic growth raises the material standard of living for almost everyone. More growth provides more money to spend on food, shelter, education, health care, and other necessities. It also allows more people to join the paid workforce, although the effects of that on measured GDP are limited because those workers must still consume.

Some countries have much more rapid rates of economic growth than others. That’s because of differences in the incentives that individuals and institutions have to save, invest, start businesses, or pursue innovations. These differences, in turn, influence the pace of economic growth and the distribution of its benefits. The best way to understand why some nations are rich and others poor is to compare their rates of economic growth over time.