Benefits Of Economic growth
Economic growth is a phrase used to indicate the increase in per capita GDP (gross domestic product). Many other factors like increase in aggregate income of the individuals of a nation also reflect economic growth. Economic growth is usually calculated as the rate with which GDP changes in a particular period. The number of goods and services produced by a country is a reflection of economic growth in that country. It can either be negative or positive depending upon the decrease or increase when compared to data of previous years. Negative growth is often associated with economic depression and economic recession. Whenever the GDP of a country increases it means there is economic growth which is quite beneficial for the country, its people and the global economies. Some of these benefits include:
1. Improves living standards.
Economic growth is vital to a country in bringing about an improvement in the living standards of its people. It also helps to reduce the rates of poverty for people of low incomes. This is principally true for underdeveloped and developing countries where growth is considered a principal method of reducing poverty among the populace.
2. High rate of employment.
Economic growth results in bringing a high rate of employment. When firms and businesses produce more outputs, their internal requirement for people gradually increases. They bring in more people to work, thus increasing the rate of employment.
3. Increased capital investment.
As an accelerator effect of economic growth there is an increase in capital investment. As a result ,economic growth is sustained for long periods of time.
4. Benefits to the Government.
Economic growth brings in higher tax revenues for the government, making it stronger. Along with this ,the government spends less amount of money as unemployment benefits.
5. Increased fiscal dividend.
Government finances are usually of a cyclical nature. As the country’s economy boosts up, more tax revenues flow into the Government Treasury. This provides the government with additional money, which can be used for financing other projects that might lead to further development.
6. Enhanced business confidence.
Economic growth creates a positive impact on the confidence that people should have when they are running their businesses. As profits of small firms and businesses gradually increase with economic growth, their business confidence rises and they exert more efforts to grow big.
7. Superior public services.
When economic growth brings about an increase in government income, the government can spend more on public services like education and NHS, thus resulting in superior public services.
However, nothing in this world comes for free and same is the case with economic growth. The human population is continuously engaged in extraction of natural resources which are non -renewable. With this rapid rate of extraction we will not be able to sustain this growth for very long periods of time. Thus, we should take sufficient care to keep these extractions within prescribed limits so that growth can be sustained for long.