Economic Growth

 ECONOMIC GROWTH

                  Economic growth means increase in output and income of the country. It is measured by using GDP. It also means increase in real GDP. It can also be described as outward shifting of production possibility curve.

Gross Domestic Product (GDP)

          It is the money value of all goods and services produced with in the country in a period of time.

v  Benefits or Advantages of Economic Growth

Ø  Increase in standard of living:

                                 Economic growth means more goods and services to a country as a whole.

               It enables the people to escape from poverty and helps them to live more comfortably.

Ø  Increase in employment:

                        Economic growth means increase in out put, as a result production and employment

                   opportunity will increase.

Ø  More leisure:

                     Economic growth raises real income of the people. As real income rises more people will  

                prefer to take leisure instead of working more hours.

Ø  Social benefits:

                     As a country grows, the revenue of government will increase. This means that the 

                government will be able to spend more on education, health and other social services.

Ø  Re distribution of income and wealth:

                         If a country grows economically, the government finds it easier to collect taxes from the

                rich in order to provide more benefits to poor.

v  Disadvantages or Costs of Economic Growth

Ø  Social cost:

                     Economic growth will create heavy social costs like, pollution, noisy problems, dusty  

               problems, congestion etc

Ø  Opportunity cost:

                     Economic growth requires more amount of capital goods. This means less resources will be

               used to produce consumer goods.

Ø  Non replaceable resources:

                     Economic growth involves faster use of non replaceable resources like coal, oil etc.

                     So these resources may be exhausted very soon.

  How to achieve Economic Growth

Ø  Investment:

                It is the key of economic growth. It will leads to an increase in production capacity of a

             country and there by economic growth.

Ø  Natural resources:

                The discovery of natural resources like coal, oil, gold etc would help to achieve economic

              growth.

Ø  Technology:

                  Technical progress like better production techniques, better organization and management of

            firms, better transportation etc would help to achieve economic growth.

Ø  Education and training:

                    Education and training helps to increase efficiency of workers and there by increase in

          out put and economic growth.

Ø  Re allocation of resources:

                     Re allocation of resources among primary to secondary and secondary to tertiary would  

            help to achieve economic growth.