Macroeconomics
G. Benefits and Drawbacks of Economic Growth
Allnationsaimtoachievethemacroeconomicobjectiveofeconomicgrowthduetothemyriadbeneftsit renders to economies and populations. These benefts include: ● Improved Standard of Living: The main beneft of achieving economic growth is improved standard of living. The increase in real GDP per capita as a result of economic growth improvespeople’sstandardofliving andallowsthemtoobtainmoregoodsandserviceswith fewerresources.Populationswithhighstandardsoflivingtendtobe moreeducated andhavea longer life expectancy .
● Job Creation: As economies grow, more employment opportunities are created. This isdue to the fact that businesses expand to meet rising demand, so they tend to demand more workers, which contributes to a decrease in the unemployment rate.
● Reduced Poverty: Economic growth has the potential to lift people out of poverty. As employment opportunities increase and incomes rise, the incidence of poverty tends to decrease. ● Entrepreneurship and Innovation: Economic growth creates a conducive environment for entrepreneurship.Astheeconomyexpands,therearemoreopportunitiesforindividualstostart and grow businesses, fostering innovation and competition. ● Global Competitiveness: A growing economy is more able to compete internationally. This leads to increased exports and a stronger position in international trade negotiations. Whileeconomicgrowthundeniablybringsforthamultitudeofadvantages,itisimperativetorecognize that this upward trajectory is not without its challenges. The main drawbacks of economic growth include:
● IncomeInequality: Ifthebeneftsofeconomicgrowthare not distributed evenly, the gap between the rich and the poor widens, leading to social and economic disparities.
● Environmental Damage: Increased production and industrialization lead to resource depletion, pollution, deforestation, and other forms of environmental degradation which negatively impact ecosystems and biodiversity. Nations nowadays try to achieve sustainable economic growth , which involves a balance between economic development and environmental preservation.
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