Salaried people are happy when their salary increases year on year similarly students become happy when their marks increase year on year, in the same way, the nation as a whole become happy when there is economic growth. Economic growth refers to that growth in which the country as a whole produces more output in terms of goods and services in the current year as compared to previous year. Economic growth is considered to be a good sign but it too like everything else has another side also, in order to have a clear understanding about this topic one should look at the advantages and disadvantages of economic growth –
Advantages of Economic Growth
Higher Standard of Living
The biggest advantage of economic growth is that it leads to higher standard of living of the citizens of the country as higher economic growth implies higher per capita income which in turn improves the standard of living of people of the country. In simple words, one cannot expect a higher standard of living without the country having good economic growth as it is one of the factors behind the good standard of living.
Good Infrastructure and Technological Development
Once economic growth happens it leads to increased activity in the economy of the country which in turn gives government good source of income through taxes and other revenues. A government can spend that money on the development of infrastructure of the country by providing good rail, road and air network besides investing money into the power sector, hospitals, and other infrastructure related things. When growth happens it brings with it multinational companies into the country which bring with them latest technologies resulting in technology boom in the country. In simple words, economic growth is the base on which two strong pillars that are infrastructure and technology boom of the nation is dependent.
Job Opportunities and Exposure to World
Another benefit of economic growth is that it brings with it lot of job opportunities as companies need workers if they want to increase the production and hence youth of the nation get jobs and financial security. Besides due to improved technology and multinationals companies coming into the country people get exposure to the world which in future can be of great help if people go outside the country for education, travel or job.
Disadvantages of Economic Growth
The biggest disadvantage of economic growth is that it may lead to inflation problem because when the income of the people rises they demand more goods and services and if the economy is unable to provide sufficient goods and services at particular price than it will lead to demand-pull inflation which has its own side effects.
Another limitation is that due to increased industrial activity nation has to face environmental hazards as more pollution means more health problems for the citizens of the country and in the long term it can lead to devastating problem like climate change or global warming problem which in itself is so big problem than it has the potential to negate all the benefits arising from economic growth.
An economic growth does not imply that all people of the country will enjoy the fruits of growth rather it creates a big divide between rich and poor because if government does not pay proper attention than due to economic growth rich people will get richer and poor people will get poorer resulting in a wealth gap which we all know has its own problems. Hence in simple words, economic growth along with government policies is one of the reasons behind an increase in wealth gap.
As one can see from the pros and cons of economic growth that while economic growth is good for the nation but at the same time if the government does not pay attention to its negative effects that it can also harm the nation. Hence government of the country should ensure that economic growth happens but at the same time, its negative effects should be minimized.