Fostering economic growth remains at the heart of any national government’s agenda. As such, governments have embraced numerous strategies aimed at promoting economic growth, such as forging alliances, signing business treaties, and becoming members to business alliances. Economic growth refers to an increase in a country’s real Gross Domestic Product (GDP) or the value of the country’s national expenditure or output. While increasing economic growth has several advantages to the nation and inhabitants of the nation, it has its fair share of disadvantages. Conversely, economics is a social science that studies the production, distribution and consumption of goods and services. The focus of this essay is on the pros, as well as the cons of economic growth. Pros of Economic Growth
There are numerous benefits of economic growth. Firstly, economic growth results in improved public services. A growing economy provides its government with more tax revenue, which, in turn, is used for the provision of welfare services. Economic growth is seen in terms of flourishing businesses and individuals, which provides channels for taxation. The revenue accrued from tax is used by the governments to provide social services, such as health and education. For instance, countries that have high levels of economic growth, such as the United States, offer social services like health and food stamps.
Secondly, economic growth results in the investment in green technologies. Amidst concerns about global warming and climate change due to development-related growth, countries are beginning to embrace green technologies that are less harmful to the environment. Countries with higher economic growth can afford to invest in these technologies, which conserves the environment. As such, people in these countries have a healthier environment and cleaner air.
Thirdly, economic growth results in high standards of living. Countries with high levels of economic growth have high living standards because they have access to better services and goods. For instance, people in the developing nations can access better health, education and other social services due to the high economic growth. In addition, there are lower levels of poverty in countries with persistent economic growth unlike those with a declining one. As such, people can afford better and healthier standards of living.
Lastly, economic growth results in a reduction in unemployment levels. An increase in economic growth results in an increase in the demand for goods and services. Mainly, this is because people can afford the goods in the market. In turn, this leads to increased job opportunities for businesses to meet the customer demand. As a result, this translates into reduced unemployment rate. Cons of Economic Growth
According to Case and Fair (2006), numerous arguments have been raised against economic growth. For instance, economic growth is associated with environmental problems. Increased economic growth often results in air and noise pollution, as well as deforestation. The forest cover suffers from economic growth as more trees are felled to create space for setting up new industries. Further, these industries pollute the environment through increased pollution. Economic growth also results in inflation. When the aggregate supply of goods cannot match the aggregate demand, the resulting effect is increased commodity prices.
Additionally, economic growth results in resource depletion due to excessive extraction of minerals (Hall, Cleveland & Kaufmann, 2006). In addition, economic growth results in increased traffic congestion, which derails normal business routines. Economic growth also leads to increased inequality between the rich and poor because employees at higher job levels will get higher pay than those at lower levels in the event of increased business profits. In a nutshell, while economic growth has several disadvantages, the benefits that arise are more than the cons.
Case, K.E., & Fair, R.C. (2006). Principles of macroeconomics. Upper Saddle River, NJ: Prentice Hall Hall, C., Cleveland, C., & Kaufmann, R. (1992). Energy and resource quality: The ecology of the economic process. Colorado: University Press of Colorado.