For most of human history, living standards barely changed. Then the Industrial Revolution happened, and output began to climb. Economic growth is that sustained increase in a country's production of goods and services over time. It is measured as the percentage change in real GDP, which adjusts for inflation.

Growth matters because it lifts incomes, funds public services, and reduces poverty. A country growing at 7 percent per year doubles its output in a decade. One growing at 1 percent takes seventy years. Small differences in growth rates compound into vast differences in living standards. South Korea and Argentina were roughly comparable in 1960. Today South Korea is far richer.

What drives growth? Capital investment, better education, new technology, and sound institutions. Economists still argue about which matters most. Some emphasize saving and investment. Others point to innovation and entrepreneurship. Others stress rule of law and property rights. In practice, all of these interact. No country has grown for long without a mix of them.

Sources of growth

• Investment in physical capital
• Education and skills
• Technological innovation
• Institutions and governance
• Openness to trade and investment