Benefits and Costs of Economic Growth

frugal growth is defined as the sustained maturation in real GDP or GNP per capita over time. Economic growth is desirable for an economy as it increases its real national in drive and standards of vivacious for its race in general. Although it is desirable, economic growth does have its returns and costs. One benefit would be increased levels of consumption. Provided economic growth outstrips population growth, it will study to higher real income per head. This throw out lead to higher levels of consumption of goods and services.With economic growth there will be improvement in business sector expectations, leading to increase in investment. Firms replace worn-out/ obsolete superior or invest in new capital. There will overly be expansion of demand, leading to increased output. Existing idle capableness and unemployed labour are utilised. This egress in to a greater extent than great deal being employed, thus increasing the level of consumption within the country. If humane welfare is related to the level of consumption, then growth provides an obvious suck up to society. Next, it can help to avoid other macroeconomic problems. spate place to higher living standards. Without a growth in productive effectiveness, mountains demands for rising incomes are likely to lead to higher inflation, proportion of payments c maturates(as more imports are purchased), etc. Growth in productive potential helps to meet these aspirations and avoid macroeconomic crises. Moreover, economic growth makes it easier to redistribute incomes to the poor. If incomes rise, the governance can redistribute incomes from the rich to the poor without the rich losing. For example, as peoples incomes rise, they automatically pay more taxes.These extra revenues for the government can be spent on programmes to alleviate poverty. Without a continuing rise in national income, the scope for helping the poor is much more limited. Society may also feel that it can afford to disq uiet more for the environment. As people grow richer, they may become less(prenominal) preoccupied with their own private consumption and more concerned to confront in a clean environment. Economic growth, though resulting in many an(prenominal) economic and social benefits to the people in the country, is not without its costs.Firstly it could result in reduced current consumption. To achieve faster growth, firms will plausibly need to invest more. This will require financing. The finance can come from higher saving, higher retained profits or higher taxes. either way, there must be a cut in consumption. In the short go bad, therefore, higher growth leads to less consumption, not more. Next, growth involves changes in production both in terms of the goods produced and in terms of the techniques apply and the skills required, the more rapid the rate of growth, the more rapid the rate of change.People may find that their skills are no longer relevant. Their jobs may be replaced by machines. People may thus find themselves unemployed, or compel to take low-paid, unskilled work. A richer society may be more concerned for the environment, but it is also likely to do more toll to it. The higher the level of consumption, the higher is likely to be the level of taint and waste. What is more, many of the environmental costs are likely to be underestimated referable to lack of scientific knowledge. Acid rain and the depletion of the ozone layer have been 2 examples.Lastly, it could deplete our non-renewable resources. If growth involves using a greater amount of resources, quite than using the same amount of resources more efficiently, certain non-renewable resources will run out more rapidly. Unless viable alternatives can be found for heterogeneous minerals and fossil fuels, present growth may lead to shortages for future generations. In conclusion, economic growth can have both benefits and costs depending on certain factors. Moreover it is desirable as long as the benefits outmatch the costs.