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A term coming from the life sciences, ‘growth’ in economics means economic growth. An increase in economic variables over a period of time is economic growth. The term can be used in an individual case or in the case of an economy or for the whole world. The most important aspect of growth is its quantifiability, i.e., one can measure it in absolute terms.2 All the units of measurement may be applied, depending upon the economic variable, where growth is being studied. We have a few examples:
(i) An economy might have been able to see growth in food production during a decade which could be measured in tonnes.
(ii) The growth of road network in an economy might be measured for a decade or any period in miles or kilometres.
(iii) Similarly, the value of the total production of an economy might be measured in currency terms which means the economy is growing.
(iv) Per capita income for an economy might be measured in monetary terms over a period.
We may say that economic growth is a quantitative progress.
To calculate the growth rate of an economic variable the difference between the concerned period is converted into percentage form. For example, if a dairy farm owner produced 100 litres of milk last month and 105 litres in the following month, his dairy has a growth rate of 5 per cent over a period of two months. Similarly, we may calculate the growth rate of an economy for any given successive periods. Growth rate is an annual concept which may be used otherwise with the clear reference to the period for which it is used.
Though growth is a value neutral term, i.e., it might be positive or negative for an economy for a specific period, we generally use it in the positive sense. If economists say an economy is growing it means the economy is having a positive growth otherwise they use the term ‘negative growth’.
Economic growth is a widely used term in economics which is useful in not only national level economic analyses and policymaking, but also highly useful in the study of comparative economics. International level financial and commercial institutions go for policymaking and future financial planning on the basis of the growth rate data available for the economies of the world.