Economic growth is an increase in the total market value of additional goods and services produced, measured using estimates such as gross domestic product (GDP). This often but not always correlates with increased average marginal productivity. Increased GDP inspires consumers to open their wallets and buy more, creating a higher material quality of life and standard of living.

Whether through expanding physical capital, improving human capital, or fostering new economies, the pursuit of economic development has many facets. Regardless of its definition and measurement, it is the driving force behind global prosperity that has reduced world poverty by orders of magnitude since the late 1970s.

In the long run, economic growth is achieved through increasing the productivity of labor and capital. This occurs through the application of knowledge and ideas to existing resources. For example, a computer built today requires the same inputs as one built 10 years ago but produces much more output due to advances in technology and better use of resources.

This progress can be interrupted by a recession, when growth slows and unemployment increases. The most robust periods of growth are called expansions, which reach a peak when employment, industrial production, and sales all increase at the same time and real GDP rises.

At McKinsey, we are exploring how to accelerate economic and social progress for everyone. We believe the answers to this question lie in inclusive economies and societies. This includes efforts to promote economic growth in historically marginalized populations by encouraging investments in their human capital, leveraging technological advancements, and building equitable business environments.