Economic growth is a key topic for governments, businesses and individuals. When economic growth is high, companies can hire more workers and people can earn more money — which makes them feel better off. But if growth is stalled or falling, then people and companies will spend less, which could result in job losses and even higher unemployment.

There are many definitions of economic growth, but most rely on the measure of gross domestic product (GDP) to quantify it. GDP includes the market value of all goods and services produced within a country’s borders in a year. But GDP is only a snapshot of the economy, not its long-term health and progress. It doesn’t tell us how the new wealth from economic growth is distributed among society or whether it’s counted only as profit by corporations.

In the past, before societies achieved economic growth, one person’s gain in income was another person’s loss. When economies grow, though, everyone’s income can rise without making anyone else poorer. This is because when overall production increases, more economic goods and services can be created.

Economists have proposed a number of theories of economic growth. For example, Colin Clark has compared the development of an economy to the evolution of human life stages. For him, growth proceeds from traditional and transitional societies, through a take-off phase to a mature economy. Other economists have highlighted the role of inequality in economic growth, with greater prosperity increasing investment in physical and knowledge capital and helping a society reach its full potential for growth.