Meaning of Economic Growth (Short Definition):

Economic
growth refers to the increase in the production of goods and services in an
economy over a specific period, typically measured by the rise in a
country’s Gross Domestic Product (GDP) or Gross National Product
(GNP). It indicates the expansion of an economy’s capacity to produce and
consume.

Measurement of Economic Growth (Detailed
Explanation): 

Economic
growth is measured using various indicators and methods. The most commonly used
metrics are:

1. Gross Domestic Product (GDP):

• Definition: GDP is the total monetary
  value of all finished goods and services produced within a country’s
  borders during a specific period (usually quarterly or annually).
• Types of GDP Measurements:
  • Nominal GDP: Measures GDP at current
    market prices without adjusting for inflation.
  • Real GDP: Adjusts nominal GDP for
    inflation to reflect the true growth in output.
  • Per Capita GDP: Divides GDP by the
    population to measure the average income per person, indicating living
    standards.

2. Gross National Product (GNP):

• Definition: GNP includes the value of
  goods and services produced by a country’s residents, regardless of
  whether the production takes place within or outside the country’s
  borders.
• Formula:
  GNP=GDP +Net income from abroadtext{GNP} = text{GDP} +
  text{Net income from abroad}GNP=GDP +Net income from abroad.

3. Growth Rate of GDP:

• Definition: The annual percentage
  change in GDP over time, which shows the rate at which the economy is
  growing.
• Formula:
  GDP Growth Rate=(GDP in Current Period−GDP in Previous Period GDP in Previous Period)×100text{GDP
  Growth Rate} = left(frac{text{GDP in Current Period} – text{GDP in
  Previous Period}}{text{GDP in Previous Period}}right) times
  100GDP Growth Rate=(GDP in Previous Period GDP in Current Period−GDP in Previous Period)×100.

4. Productivity Measures:

• Definition: Measures growth in output
  per unit of labor or capital, indicating how efficiently resources are
  being utilized.
• Example: Labor
  Productivity = Output / Hours Worked.

5. Other Indicators:

• Industrial Production Index
  (IPI):
  Measures output in industrial sectors.
• Employment Rates: Indicates economic
  expansion if job creation aligns with growth.
• Consumption and Investment
  Trends:
  Higher consumer spending and investment reflect economic growth.

Why GDP is the Most Common Measure:

1. Comprehensive: Captures all goods and
   services within an economy.
2. Comparable: Allows for easy comparison
   across countries and time periods.
3. Widely Accepted: Used by governments, international
   organizations, and researchers.

Limitations of GDP as a Measure of Growth:

1. Ignores Distribution: GDP does not reflect
   income inequality.
2. Non-Market Activities: Excludes unpaid labor and
   informal economy activities.
3. Environmental Costs: Fails to account for
   resource depletion and pollution.
4. Quality of Life: GDP growth doesn’t
   necessarily indicate improved well-being or happiness.

For a
holistic understanding, other metrics like the Human Development Index (HDI)
or Green GDP are often used alongside GDP to measure economic progress.