Advantages and Disadvantages of Economic Growth (2024)

Advantages and Disadvantages of Economic Growth

Advantages

• Higher average incomes (which, ideally, results in a higher standard of living)
• Improved public services and infrastructure (more people are able tp pay taxes, which gives the government more money to spend on infrastructure and public services)
• Lower unemployment rates
• Lower government spending (less people are on unemployment benefits)

Disadvantages

• Demand-pull inflation (if demand increases faster than supply, more people are able to buy more things)
• Recession usually follows after inflation
• Negative externalities (e.g. increase in environmental degradation)
• An increase in wealth inequality

Evaluation

Economic growth can be good for the economy and people however there are some other consequences, and economic growth should be regulated to ensure these disadvantages are less likely to appear.