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What Are the Different Sources of Economic Growth?

By Erik J.J. Goserud
Updated: May 17, 2024

Economics is the study of decision making entangled in a complex web of limited resources and unlimited wants. Economics has long been the focus of many bright minds; however, its sometimes abstract nature and subjective theories make definitive answers to questions difficult. There are arguments over how to measure growth, what causes growth, and the things that can be done to alter economic growth. All of these variables make determining the sources of economic growth difficult, but a general consensus among experts points toward resources and technological advancement.

Resources can mean a variety of things. On a small scale, resources may allude to a person's allowance, income, or food in their pantry. On a larger, or macro, scale, resources can mean a nation's wealth or the natural substances that may be converted to money through industry and trade. Basically, resources refer to items of value that can be used for other things. Somehow acquiring, discovering, or creating more availability of resources can help spur economic growth.

People can be resources too, and the more capable a person, the more valuable the resource. For this reason, factors such as education and employment play into economic growth. A nation with a broader and more skilled workforce will find itself more productive than one with a high unemployment rate of incompetent workers. People, and specifically their skills and education, can therefore be important players in sources of economic growth.

Sources of economic growth are very dynamic as well. With globalization occurring, it is important to understand that not all sources of economic growth are domestic. With nations trading, borrowing, and lending with each other, complex international interactions can make a crisis in one country become an issue in others.

Technological and industrial booms are also among the most powerful sources of economic growth. These rapid advancements can create jobs and income for individuals and countries. They can self-perpetuate too by the process of one breakthrough leading to the next. There are many examples of perpetuating processes in economics that contribute to personal and national growth.

It is important to note that the sources of economic growth may vary based on the manner in which such growth is being measured. One challenging aspect of economics is the difficulty in obtaining accurate information, which is why most economic principles remain theoretical. That being said, many theories although unproven, are regarded as the basis for policies that affect many people. Only the most trusted or widely accepted theories are generally used in this manner.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
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