Economic growth increases state capacity and the supply of public goods. When economies grow, states can tax that revenue and gain the capacity and resources needed to provide the public goods and services that their citizens need, like healthcare, education, social protection and basic public services. Broadly speaking, there are two main sources of economic growth: growth in the size of the workforce and growth in the productivity (output per hour worked) of that workforce. Either can increase the overall size of the economy but only strong productivity growth can increase per capita GDP and income. Economic growth, as measured by GDP, is driven by two components: population growth and labour productivity. Labour productivity reflects the capacity for increased output from the existing quantity of labour in the economy. Various government agencies and independent analysts produce measures of labour productivity.

Saranya R Kurup

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