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Economic potential

Wikipedia contributorsAdapted for Fathomly · View authors
1 min read
Source updated June 18, 2026

Economic potential is the potential of a region, nation, or corporation for economic development and growth. Typically, discussions of economic potential occur when available resources have not yet been tapped and fully developed or exploited, possibly because of missing infrastructure.

The Dictionary of Military and Associated Terms (2005) defines economic potential as

"The total capacity of a nation to produce goods and services."

01Measurement

Economists measure economic potential through indicators such as potential output, labor productivity, and capacity utilization. Institutions such as the International Monetary Fund and the World Bank use structural models to estimate potential growth trends and the distance of an economy from its productive frontier.

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This article is adapted from the Wikipedia article “Economic potential”, written by its contributors and licensed under CC BY-SA 4.0. Fathomly has changed the layout, removed citation markers, navigation and maintenance notices, and adjusted punctuation. This adapted version is shared under the same license. For references, see the original article.

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Related topics

Productive capacity

Productive capacity is the maximum possible output of an economy. According to the United Nations Conference on Trade and Development, no agreed-upon definition of maximum output exists.

Potential output

In economics, potential output refers to the highest level of real gross domestic product (potential output) that can be sustained over the long term. Actual output happens in real life while potential output shows the level that could be achieved.

Production-possibility frontier

In microeconomics, a production-possibility frontier, production-possibility curve (PPC), or production-possibility boundary (PPB) is a graphical representation showing all the possible quantities of outputs that can be produced using all factors of production, where the given resources are fully and efficiently utilized per unit time. A PPF illustrates several economic concepts, such as allocative efficiency, economies of scale, opportunity cost (or marginal rate of transformation), productive efficiency, and scarcity of resources (the fundamental economic problem that all societies face).