Economic growth and development: Factors and challenges

Economic growth and development are fundamental concepts of modern economic theory and key objectives of economic policies in countries worldwide. Although they are often used as synonyms, there are significant differences between these two concepts – while economic growth refers to the quantitative increase in gross domestic product (GDP) and total production, economic development implies a broader set of qualitative changes, including improvements in living standards, poverty reduction, increased employment, as well as the development of institutional and social capacities. The subject of this research is the analysis of factors that influence economic growth and development, as well as the identification of key challenges faced by modern economies in achieving sustainable development. The aim of the paper is to determine, through theoretical and empirical analysis, the importance of various growth determinants such as human capital, technological progress, investment, and institutional quality, as well as their interrelationships. Special emphasis is placed on the role of globalization and digitalization as contemporary drivers of economic change. The paper also identifies the key challenges of modern development, among which growing economic inequalities, unemployment, climate change and political instability stand out. It is concluded that in order to overcome these challenges, it is necessary to implement coordinated economic policies aimed at inclusive and sustainable development. The paper applies qualitative scientific methods, including analysis, synthesis, and comparison of relevant domestic and international literature, as well as secondary data sources from international institutions. The research results indicate that sustainable economic development cannot be achieved solely through economic growth, but requires an integrated approach encompassing the economic, social, and environmental dimensions of development. It was also found that countries that invest in education, innovation, and institutional efficiency achieve more long-term and stable development outcomes. The paper also identifies key challenges of contemporary development, among which rising economic inequality, unemployment, climate change, and political instability stand out. It is concluded that overcoming these challenges requires the implementation of coordinated economic policies aimed at inclusive and sustainable development.