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To what extent is economic growth desirable

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Introduction

To what extent is economic growth desirable? In economics, short term economic growth translates to a rise in real GDP, and in the long term an increase in the maximum output (aggregate goods and services) an economy can produce. Growth is caused by an increase in aggregate demand; this may be as a result of higher consumer expenditure, more investment or as seen recently in BRIC, a substantial increase in exports which all form a component of AD. Economic growth is seen to be extremely desirable by all governments as it solves many problems of modern life; there are of course many consequences but this is a small price to pay compared to what could be gained, so economic growth is desirable. The benefits of economic growth for all economies and especially LEDCs are increased employment, reduced poverty and a higher standard of living. These events occur because as AD increases, more factors of production, most notably labour are needed to produce goods and services for the economy. ...read more.

Middle

This is especially important in today's world and almost all governments have budgets devoted to environmental protection. The EU, whose member's economic growth is collectively very high, has set a target of achieving 20% of energy needs from renewable sources by 2020. Investment in technology and science has meant that energy intensity (energy consumption per unit of GDP) has decreased dramatically over the last 30 years, even in developing countries. On the other hand, economic growth puts strains on the environment and the negative externalities accrued such as pollution can damage the world's health and economy. Pollution emitted from factories and energy plants in developing countries often drifts causing air pollution and global warming. These two incidents are very important for the future generations as many coastal regions and islands will be underwater if the ice caps melt due to global warming. This will cause a strain on the world's land and scarce resources which is bad for the economy. Also air pollution contributes to asthma and respiratory problems which will lead to governments needing to spend more on health services. ...read more.

Conclusion

In the UK, income inequality can be seen in the North South divide whereby most of the nation's wealth is concentrated in London and the South, everyone in our economy does not directly benefit from growth, especially in rural areas and ubiquitous sectors like health and education. Economic growth therefore, is always desirable provided it is sustainable in the long term and of a high enough percentage in GDP. In the long term, economic growth seems to provide solutions to many economic and social problems which would otherwise not be solved by the government. Economic growth also provides developing countries with the opportunity to improve the lives of their people and compete with developed nations, there are predictions that China will surpass America in terms of economic power over the next 30 years. The consequences of economic growth whilst important can be lightened through regulation and control so it may seem a small price to pay in the long run. So overall, growth is beneficial to all economies but measures need to be in place to prevent economies from 'overheating' and slumping due to un-sustainable growth. ...read more.

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Here's what a teacher thought of this essay

4 star(s)

This is a well planned and structured piece that makes many good points. It would benefit from the classic AD/AS diagram to show economic growth and its effect on inflation. My main criticism is the disregard for the role of aggregate supply as this is the driver of economic growth

Marked by teacher David Salter 12/02/2012

Here's what a star student thought of this essay

4 star(s)

Response to the question

This essay engages superbly with the question, exploring whether economic growth is desirable by looking at benefits and disadvantages. If I was answering this question, I would be asking myself "is it always desirable?" as that leads you to look ...

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Response to the question

This essay engages superbly with the question, exploring whether economic growth is desirable by looking at benefits and disadvantages. If I was answering this question, I would be asking myself "is it always desirable?" as that leads you to look for situations where it's not. I liked how there was a strong exploration of why it isn't desirable, as this is sometimes a problem with this question. Some people think economic growth cannot have any negative effects, so it has a one-sided argument and doesn't appreciate the disadvantages. This essay does this well!

Level of analysis

The analysis in this essay is strong. What I particularly like is the flow each paragraph. Every point flows from the next, making for a strong display of understanding. The examiners will appreciate such style, even if you think you are pointing out the obvious! It was great to see some exploration of economic school of thought in "Keynesians argue that it could lead to demand-pull" yet it was such a shame not to see a diagram! This essay distinctly lacks an aggregate demand and supply diagram. Such a diagram could show a shift in aggregate demand, causing an increase in real GDP and thus an increase in employment. I would note that this essay should discuss the cause of economic growth. In my experience, without discussing the cause, you will not get the top marks for evaluation. You should be saying that growth caused by increases in aggregate supply is more beneficial, etc. If this essay wanted to explore the task further, it would be good to discuss from what viewpoint is it desirable. Is economic growth desirable for the government, the poor, the free market economists, the Keynesian economists, the rich? Those are the sort of points which will set an economics essay apart from the rest.

Quality of writing

The structure is good, however I have a problem with the introduction. It's good to have a clear argument, but saying "so economic growth is desirable" in the introduction is a bit presumptuous. I would be setting up the argument in the introduction by defining the key terms and outlining that it's not clear cut. Then, in the conclusion, you can draw upon analysis and evaluative comments to make a justified judgement. This doesn't hinder this essay, but in some cases coming to a conclusion so early may make for a one-sided argument. The style is strong, making this argument very convincing. Spelling, punctuation and grammar are superb and technical terms are used well.


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