• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

The Desirability of Economic Growth.

Extracts from this document...

Introduction

The Desirability of Economic Growth The Benefits of Economic Growth 1. Economic growth means that real GDP has increased and therefore leads to an improvement in the material standard of living. This means that individuals have higher levels of real purchasing power enabling them to buy a greater volume of goods and services - increasing economic welfare ( bearing in mind individuals have unlimited wants ). For instance, as western economies have grown over the decades consider the changes in 'material ownership' of products such as ownership rates of cars, dishwashers, housing, the number of foreign holidays taken - all of which have continued to increase as real spending power has grown. 2. Higher real incomes have enabled individuals to have greater access to leisure time / activities. People can now satisfy their basic wants more easily, with less time worked and hence devote more time to leisure as they do not have to work as long to afford the basic necessities for life. ...read more.

Middle

2. With economic growth comes a growth in consumption, more resources are needed reducing the remaining supply of non-renewable resources such as fossil fuels ( oil, gas and coal ), metal ores and other natural resources. As these are used up at a faster rate, there are fewer supplies left for future generations. Thus the finite pool is more rapidly becoming exhausted. The growing affluence of consumers has led to for instance, the ever increasing rates of depletion of rain forests across the world. 3. With growth comes the creation of new, and expansion of, existing businesses. These produce a number of so-called external costs or negative externalities. These are the wider spill over costs imposed by firms on society and individuals. Areas of natural beauty such as the country side may be destroyed in the name of economic progress. Pollution in the atmosphere may be increased, as well as in rivers and on land as production levels increase to meet higher global demands for goods. ...read more.

Conclusion

If exports suffer and imports penetrate the country - then unemployment may increase in these sectors. ( Evaluation: a country will not necessarily lose its competitiveness straight away. It may take some time before the inflation differential between itself and its trading partners starts to make a difference - so we must be realistic !! ) 2. Fast economic growth, irrespective of the impact on inflation will worsen the balance of payments, as imports are increasingly purchased. 3. However, if inflation does creep-up then the problem that arises is the corrective action taken by the Monetary Policy Committee ( in the UK's case ) in raising interest rates. This is the automatic trigger that follows inflationary rises, as interest rates choke off excess demand. The problem is that higher interest rates depress economic activity, and can lead to firms having to lay-off workers as sales in the economy fall. Thus, the overheating economy may trigger a harsh period of high interest rates to cool inflation in turn imposing unemployment on the economy. Edexcel AS Economics Unit 3 Economics Growth The Blackpool Sixth Form College (c) 2002 BN 13/11/02 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. The costs and benefits of economic growth.

    Is Economic Growth Sustainable? Environmental pessimism: resource depletion and the declining environmental quality of planet earth Some people argue that economic growth is not sustainable in the long run.

  2. Free essay

    From an economic perspective should my council do more to recycle a greater proportion ...

    This means if recycled it cuts down on the opportunity costs. Incinerators are less common as they can give out very toxic substances (metals and gas). Negative Externalities and Taxes Negative externalities result in overproduction and so market failure; this happens when social costs exceed private costs.

  1. GDP and Growth

    produced more and made profits, also due to the low interest rates, more money was borrowed and invested in the firms, these factors allowed them to give the employees better wages so they had more to spend. It also created more jobs as the unemployment rate went down, from 1986 (11.77%)

  2. Briefly explain why initial levels of GDP might influence subsequent economic growth.

    and1973, and the GDP level and subsequent growth for 1973 and 1999, but not for the later period, at least among the more developed economics. The earlier period is indeed one where growth performance was dominated by catch up. This suggestion that some of Germanys superiority in TEP growth relative

  1. China or India? Many companies ask themselves this question. Due to saturated markets, increasing ...

    you might not have enough control over them and no contact to the market. Conflicts can arise because there are differences of interest between partners and they might be violations of confidentiality. China has many import tariffs and restrictions and FDI is still restricted and involves long negotiations with the government.

  2. What are the ecological consequences of global economic growth?

    This could also suggest that population growth is also a source of pressure on natural environments, for example, the more people there are, the more food, which then in turns means to put more land under agriculture, displacing many natural habitats and forests through 'deforestation' and the world's forest are vital to many ecosystems.

  1. Discuss the assertion that the concentration of economic power in the public sector undermines ...

    This is attributed to the inefficiencies and problems associated the public sector, such as complacency and lack of motivation in individuals, lack of motivation to be efficient in firms, etc. However, the concentration of economic power in the public sector does have its merits in promoting economic growth.

  2. China, as a crucial country in the world, is suffering from a variety of ...

    External costs of economic growth have reflected in many aspects. Under the Three Gorges Projects, more than a million people who live in Yangtze Delta lost their homes; plenty of forests were damaged to build a river dam. Even though this project can bring many benefits for Chinese economic development, nevertheless, it has created enormous environmental disaster.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work