Advantages and Disadvantages of Economic Growth

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

Inflation Problem

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.

Environmental Impact

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.

Wealth Gap

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.

0 comments… add one

Leave a Comment


Related pages


what does the word consignment meandirect and indirect quotation for exchange rateswhat are the advantages and disadvantages of industrializationfeatures of capitalismcapital withdrawal journal entrydisadvantages sales promotiondupont analysis roeassumptions of capm modeladvantages of a debentureadvantages of a decentralised structureadvantages and disadvantages of traditional bankingwhat is convention of materialityadvantages and disadvantages of investment appraisaladvantages and disadvantages of international monetary systembackward integration advantages and disadvantagesconsignors meaningcapm assumptions explainedhorizontal analysis accounting exampledrawbacks of ratio analysistypes of liquidity ratioadvantages and disadvantages of takeovers and mergersjournal entries for provisionsmeaning of wholesale bankingwhat are leverage ratiosearned but unbilled revenueadvantages of hire purchase and leasingtrade discount entrydrawer & draweemerits of decentralisationebit equationmerits and demerits of social mediaadvantages and disadvantages of discounted cash flowdisadvantages of cashless policydisadvantages of vertical integrationwhats a conglomerateunsystematic risksbenefits of monopolistic competitioncalculation of crr and slradjusting entries for unearned revenueconsignee copydebit cards advantages and disadvantagespros and cons of mixed economyaudit opinion unqualifiedfull form of slrdisadvantages of break even analysiswhat is duality in accountingnse pre openwhat is the difference between crr and slrprepaid insurance entryadvantages and disadvantages of cost accountingexamples of diversifiable riskwhat is vertical mergerhow to calculate cross currency ratesdifference between process costing and job costingmixed economies definitionoperating lease finance lease differencewhat is the law of diminishing utilitydisadvantages of perfect competitionconsignee meanseconomics substitutes and complementscrr and slr differencedefinition of unitary elasticcharacteristics of forward contractbank loan accounting entriesautocratic leadership pptwhat is the meaning of bearer chequedvr financehow to fill out a withdrawal slipfund flow analysis in financial managementwhat is the difference between direct expenses and indirect expenseswithdrawal slip in bankhypothecationtypes of accounts real nominal personalwhat are the advantages and disadvantages of decentralizationdifferent types of crossing of chequesthe autocratic leader