If economic growth raises the income of everyone in a society in an equal proportion, then the distribution of income will not change. However, if the growth occurs without a reduction in poverty, income distribution could become unequal.
Environmental concerns:
Fast growth can create negative externalities e.g. noise pollution and lower air quality arising from air pollution and road congestion. Increased consumption of de-merit goods which damage social welfare.Economists generally agree that economic development and growth are influenced by four factors: human resources, physical capital, natural resources and technology. Highly developed countries have governments that focus on these areas.
Economic Growth is important because it is the means by which we can improve the quality of our standard of living . It also enables us to cater for any increases in our population without having to lower our standard of living.
Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. An increase in economic growth caused by more efficient use of inputs (increased productivity of labor, physical capital, energy or materials) is referred to as intensive growth.
Economic growth enables consumers to consume more goods and services and enjoy better standards of living.
The benefits of economic growth include
- Improved public services.
- Money can be spent on protecting the environment.
- Investment.
- Increased research and development.
- Economic development.
- More choice.
To increase economic growth
- Lower interest rates – reduce the cost of borrowing and increase consumer spending and investment.
- Increased real wages – if nominal wages grow above inflation then consumers have more disposable to spend.
- Higher global growth – leading to increased export spending.
The Top 10 Solutions to Cut Poverty and Grow the Middle Class
- Create jobs.
- Raise the minimum wage.
- Increase the Earned Income Tax Credit for childless workers.
- Support pay equity.
- Provide paid leave and paid sick days.
- Establish work schedules that work.
- Invest in affordable, high-quality child care and early education.
- Expand Medicaid.
Barriers to Economic Growth and Development
- Poor infrastructure.
- Human capital inadequacies.
- Primary product dependency.
- Declining terms of trade.
- Savings gap; inadequate capital accumulation.
- Foreign currency gap and capital flight.
- Corruption, poor governance, impact of civil war.
- Population issues.
Causes of poverty is changing trends in a country's economy. Associated with the lack of education, high divorce rate, a culture of poverty, illiteracy, overpopulation, epidemic diseases such as AIDS and malaria and environmental problems such as lack of rainfall.
Policies for economic development could involve:
- Improved macroeconomic conditions (create stable economic climate of low inflation and positive economic growth)
- Free market supply-side policies – privatisation, deregulation, lower taxes, less regulation to stimulate private sector investment.
Economic growth is defined as an increase in the productive potential of an economy. Growth can lead to higher living standards because if GDP rises, there is more money in the domestic economy. This means that business can make more profits, and therefore can pay employees higher wages, or even hire more employees.
Very often economic growth in a nation does not bring about economic development. Economic growth of a nation can also be accompanied by increase in poverty and growing levels of unemployment. This type of growth if not accompanied by economic development in he long term is bound to have adverse affects on society.
Economic growth is an increase in the production of goods and services over a specific period. Economic growth creates more profit for businesses. As a result, stock prices rise. That gives companies capital to invest and hire more employees.
Economic growth reduces poverty because growth has little impact on income inequality. In the data set income inequality rises on average less than 1.0 percent a year. Since income distributions are relatively stable over time, economic growth tends to raise incomes for all members of society, including the poor.
The only source of income in a poor country is government tax and public resources. Every one fights for government jobs and when there is high unemployment, those in power are under pressure to offer jobs to their relatives and friends. This creates a vicious cycle of poverty, incompetence and corruption.
