In what sense is economic growth cumulative? In my economics syllabus, one of the student competences is to "Show the cumulative nature of growth and measure average and annual rates of growth". What I don't understand is how a country's GDP growth can be subject to cumulative or compounding effects?
The basic idea is simple. If you grow 1% each year for five years you end up with a GDP that is (1.01)^5 of what you started: the 1% growth of each year accumulates over time.