Where does economic growth come from? What are its consequences?

Sources of Economic Growth

As previously written, economic growth is achieved through the increase in the quality and/or quantity of FoPs.  But how is this possible?  Regarding land, an increase in "quantity" can occur when new sources of raw materials are discovered (i.e. the oil well off Brazil in 2007 and now the Gulf of Mexico) or when farming/drilling techniques become more efficient ("quality" of the FoP), i.e http://mndcnews.com/archives/222317.   

Regarding labor and human capital, a country can either let more people in through loosening immigration policies (http://thecitizen.co.tz/editorial-analysis/47-columnists/1700-in-praise-of-latin-american-immigrants.html) or improving the quality of labor through education and training (http://tvnz.co.nz/business-news/fta-brings-chinese-teachers-nz-3517955).  

Economic growth can also be achieved through improving the quality and/or quantity of the capital stock of an economy.  When savings increases, more investment can occur (more machines, factories).  When more people become educated, more advancements in technology via R&D will be made.  In this section, we use two terms; capital widening and capital deepening.  Capital widening occurs when more forms of technology are placed into more hands (not individually more productive people, but more in terms of numbers of people with technology).  Capital deepening occurs when each individual worker becomes more productive through more productive techniques / tools.  

Lastly, the improvement of political and economic institutions as described in my thesis (see post 1/1/10) leads to economic growth as innovation becomes better protected, banking becomes more monitored and infrastructure becomes stronger among other similar developments.

Consequences of Economic Growth 

- increase in incomes : GDP goes up, GDP per capita logically follows assuming equal income distribution

- better indicators of standard of living : when GDP goes up, enrollment ratios, life expectancy, GDP per capita, and literacy tend to follow

- more money for the government : as people make more and tax institutions improve, governments get more money to use for development of infrastructure, education, health care, etc.

- negative externalities and future threat : countries that are developing thanks to growth see firms that pollute more due to increased production and that may engage in practices that threaten future growth (i.e. sustainable development, or development that doesn't impact future development, for example planting trees if cutting them down).

- inequality creation : with economic growth comes winners and losers; often, the upper percentage of households get a higher percentage of income and the lower less.  This can increase the Gini coefficient which has happened following growth in South America, one of the most unequal continents on Earth in the last three decades of the 20th century (and still today).