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Benefits of economic growth

High living standard

Population can have access to better goods and services. There will be low level of poverty. People will be able to afford a better and healthy living standard.

Improved public services

Increased income leads to more tax revenue for the government which in turn can be used for the welfare of the public in form of health and education services.

Low level of unemployment

An increase in economic growth leads to rise in demand for goods and services and thus there will be low level of unemployment.

Increased investment in ‘green technologies’

A country with high level of economic growth can afford to invest in technologies which have less harmful effect on the environment. People will have cleaner air and a healthier environment to live.

Cost of economic growth


The biggest risk of fast economic growth is inflation. If the aggregate supply could not match with aggregate demand, it will result in rise in general price level of goods and services.

Opportunity cost

Economic growth may be achieved because more resources are allocated for capital goods. This will be at the cost of consumer goods.

Environmental problems

Increase pace of economic growth can create negative externalities such as noise and air pollution. Forest will be cut to create space to set up industries. Moreover more industries will result in an increase output of polluting substances.



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