Efnahagsvaxtar

Efnahagsvaxtar is the Icelandic term for economic growth. It refers to the sustained increase in the value of goods and services produced in an economy over time. It is most commonly measured as real GDP growth, which adjusts for inflation.

GDP growth per capita is often used to gauge living standards, while productivity measures such as output per hour worked explain long‑term growth potential. Growth itself is not a welfare measure and may occur alongside widening inequality or environmental pressures.

Measurement focuses on the real GDP growth rate, but analysts also look at GDP per capita, total factor productivity, investment rates, and employment. Long-term growth depends on technology, capital accumulation, and improvements in human capital.

Determinants include physical capital, labor supply, and advances in technology, as well as institutions, education, infrastructure, and openness to trade and investment. Demographic trends and macroeconomic stability also influence growth dynamics.

Theoretical perspectives vary. The Solow model emphasizes capital deepening and exogenous technological progress, while endogenous growth theories highlight innovation, knowledge spillovers, and policies that sustain learning and adaptation.

Impacts of growth include higher living standards and poverty reduction, but growth can also affect income distribution and the environment. Policies aimed at promoting sustainable growth include stable macro policies, investment in education and R&D, infrastructure, competitive markets, and secure property rights.

Critiques note that growth alone may not capture well‑being and can be uneven across society. Measurement limitations and sustainability concerns lead many economists to pair growth with indicators of health, education, equity, and ecological impact.