Benefits and Costs of Economic Growth Justin Yan
"Explain the benefits and costs of economic growth"
Economic growth is the increase in ability of an economy to produce goods and services to fulfil the needs and wants of the consumers, essentially it is the long-run increase in a country’s productive capacity. Economic growth can also be defined as an increase in the real value of goods and services produced in the economy which is measured by the percentage change of the annual real GDP.
There are several benefits and costs of economic growth. Firstly, economic growth will result in lower unemployment. This is as an increase in economic growth means there’s an increase in the value of national output / national expenditure. With higher output, firms will employ more workers in order to keep up with production and meet the increase in output. Because of an increase in employment, standards of living in the economy will also increase. This is as GDP per capita will increase, therefore each households disposable income of workers will rise thus allowing them to purchase more goods and services which will lead to better living standards. Along with this, poverty will be reduced and other effects such as lower crime rates and higher life expectancy will be seen. Furthermore, economic growth will lead to improved public services. This is as higher spending will lead to higher tax revenue from consumers which the government can in turn be used in things like education, healthcare, infrastructure etc. In the short run, this can create more employment as people will be employed to build said infrastructure. Unemployment rates will further decrease and thus living standards will increase more. In the long run more economic growth can be achieved as improvements in educational standards can give the population a greater diversity of skills and literacy, which can allow them to employ more efficient methods of production when working, thus increasing their productivity and increasing revenue. Infrastructure can also increase economic growth, for example building an extra airport runway will allow for more employment and also boost the economy. Improvements in healthcare will also further increase life expectancy and improve standards of living as more people will be treated of diseases. In addition, the workforce will be more productive as people will contract diseases and if they do they will be treated faster, thus productivity will be maintained at a high level. Lastly, greater tax revenue will lead to lower government borrowing, as there is less of a need to spend money on unemployment benefits; the money...