NOTE
Economic Growth
English translation of the original VNote “Economic Growth”, preserving its structure with only necessary small corrections.
This is a historical learning note and may contain outdated or incomplete understanding.
Note: This preserves the original VNote structure and wording as much as possible. Only clear errors or statistical/institutional definitions that have changed are corrected.
1. What Is Economic Growth?
Growth in national income. Why does a country’s output keep growing, and why do growth rates differ across countries?
2. How to Measure Economic Growth
2.1. GDP
2.1.1. What It Is
GDP is the market value of all final goods and services produced within an economy during a given period.
- Given period: a flow rather than a stock
- Final goods and services: used for final consumption or investment rather than intermediate production
- Market value: price Long-run GDP growth is economic growth; trend output is potential output and its growth rate is potential growth.
2.1.2. How GDP Is Calculated
2.1.2.1. Three Dimensions
- Production dimension
- Expenditure dimension
- Income dimension
From the expenditure side:
Y=C+I+G+NX.
2.1.2.2. GDP Accounting Principles
- Second-hand transactions are not counted as new production.
- Taxes and transfer payments are not themselves new production.
- Inventory accumulation is counted as investment.
2.1.3. Comparing GDP Across Time
Nominal GDP includes price changes; real GDP removes them. The GDP deflator is nominal GDP / real GDP.
2.1.4. GNP
GNP measures production associated with a country’s nationals. Modern statistics more commonly use GNI; roughly, GNI equals GDP plus net primary income from abroad.
2.1.5. Is GDP Reliable?
GDP is an important measure of economic activity, but it does not fully measure wealth, welfare, distribution, the environment, or non-market activity.
2.2. Other Indicators
2.2.1. Electricity Use and Freight Volume
2.2.2. New Credit
2.2.3. Aggregate Social Financing
Single-month changes should be interpreted together with seasonal history.
2.2.4. PMI
50 is commonly used as the expansion/contraction threshold; direction and context also matter.
2.2.5. CPI
Consumers.
2.2.6. PPI
Producers.
2.2.7. Asset Prices
Housing prices.
3. Three Drivers of Growth
This records the demand-side “three engines”: consumption, investment, and net exports. It is not the complete GDP expenditure identity, which is Y=C+I+G+NX.
3.1. Investment
- Fixed-asset investment
- Corporate investment
- Real-estate development
3.2. Consumption
- Total retail sales of consumer goods
3.3. Imports and Exports
Imports, exports, and net exports are trade measures; direct-investment inflows are capital flows rather than trade.