The Impact of Economic Growth (AQA A Level Economics)

• When evaluating the impact of economic growth, it is useful to consider both the cost and benefits it offers to society
   

Evaluating Economic Growth 

The Benefits	The Costs
Increased employment and productivity contribute to a growth in wages and overall income levels As economic output expands, there is a potential for higher incomes for individuals	Economic growth often leads to negative externalities such as increased air pollution, the generation of plastic waste, and the degradation of natural resources These environmental costs can have long-term consequences on ecosystems and public health
A higher GDP can lead to improved standards of living for the population This includes access to better healthcare, education, and an overall enhanced quality of life	Intensive economic growth can lead to the depletion of natural resources Extracting resources at unsustainable rates can jeopardise the long-term availability of essential inputs for various industries
Economic growth often facilitates investments in infrastructure Governments may allocate funds to build better roads, public transport systems, and broadband networks. Improved infrastructure contributes to overall economic efficiency	Unequal distribution of wealth If the benefits of growth are concentrated among a small portion of the population, it can exacerbate income inequality and social tensions
Economic growth fosters a more competitive marketplace, leading to increased competition and innovation As businesses thrive, consumers benefit from a greater variety of goods and services. This variety enhances consumer choice and promotes innovation	Economic growth may not be evenly distributed across regions, leading to unbalanced development Some areas may experience rapid growth while others lag behind, contributing to regional disparities in infrastructure, employment opportunities, and living standards

The impact of economic growth on individuals

• Economic growth can lead to an increase in income levels for many individuals. As businesses expand and create more jobs, individuals may experience rising wages and higher income
• However, the benefits of economic growth may not be evenly distributed. Higher-income individuals, particularly those who own assets or hold positions in industries experiencing significant growth, may see disproportionately larger increases in their incomes compared to lower-income individuals, which can result in significant disparities between the rich and the poor

The impact of economic growth on the economy

• With economic growth, several macroeconomic goals can be achieved. Employment rates may rise, standards of living might improve, and there's potential for increased investment in education, healthcare, and infrastructure
• However, it's crucial to note that high levels of economic growth may also lead to elevated inflation, making exports more expensive
  

The impact of economic growth on the environment

• The pursuit of economic growth often comes with negative externalities. This includes an increase in air pollution, the generation of plastic waste, and the degradation of natural resources
• Rapid economic growth can lead to increased demand for natural resources, potentially resulting in overexploitation and depletion of these resources. This can have detrimental effects on ecosystems and biodiversity
• It can lead to higher levels of waste production. Inadequate waste management practices can result in pollution and environmental degradation
• The environmental costs associated with growth can have lasting consequences on ecosystems and public health