Economics sources, Measurement and Sustainability of Economic Growth

Measures and Sustainability of Economic
Growth
The growth rate of an economy depends on the rate at which technological
advancements, labor forces, physical and human capital, and natural resources
grow. Therefore, these forces can be summarized to the GDP equation as
follows:
Where:
= Growth in labor
= Growth in Capital
Example of Measures and Sustainability of
Economic Growth
Assume that the labor percentage share in national income is 75% for a speci c
country. The growth in technology, labor, and capital are 4%, 5%, and 6%,
respectively. Calculate the growth in potential GDP.
 Solution
Using the equation:
Then,