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Costs and benefits of economic growth essay
Economics
Sixth Form (A Levels)
• A2 - A LevelRecommended for you
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‘Discuss the costs and the benefits of economic growth’ (25) Essay Plan: Introduction: -definition of economic growth: long-term expansion of the productive potential of the economy increase in the value of national output/national expenditure. -why is it important major objective of policy for most governments enables the increase of living standards, the improvement of tax revenues and creates more job opportunities measures the growth of the economy’s overall well-being Paragraph 1: Benefit -Point: Economic growth leads to an improvement of living standards that can be measured by real GNI per capita and quality of life -Definitions: living standard generally, the quality of housing, material comfort, and wealth experienced by an individual or group -Evidence: The average worker in the United States would have had to work for 333 hours to buy a fridge in 1894, now, a better fridge can be bought in 20% of that time by an average worker. Life expectancy of a person born in Japan in 1880 was 35 years, the life expectancy in Japan has gone up to 83 years in 2017. -Explanation: Causes: Increase in AD +AS As average incomes rise and there are more goods and services available for consumption, more people will be able to afford the goods and services, thus resulting in an improvement of living standards. Consequences: •improved resources for education •more spending on healthcare •increased tax revenue •enables more consumption
-Evaluation: Increased income/wealth may not be distributed evenly, and income inequality may increase e. Chinese migrants who move to cities have seen rises in living standards while those remaining in the countryside have not seen a massive increase in income Paragraph 2: Point: Growth helps to pull people out of absolute poverty and improve HDI value Definition: HDI value developed by the UN to assess the social and economic development levels of countries mean years of schooling expected years of schooling life expectancy at birth gross national income per capita Definition 2: absolute poverty when a household income that is considerably lower than the median level of income within a country absolute poverty thresholds will vary between developed and developing countries the extreme poverty measure now used by the World Bank is the percentage of the population living on less than $ 1 a day (PPP) Evidence: Studies have shown that there is a positive relationship between economic growth and the rate of poverty reduction in developing countries (Pernia and Quilbria, 1999; Tisdell, 2008) The percentage of people living in extreme poverty has fallen across all regions, with the poverty head count ratio reduced by 94% from 1980 to 2015 in rural China Explanation: Causes: improving the living conditions of people who are already poor Aid, particularly in the medical and scientific areas, is essential in providing better lives, such as the Green Revolution and the eradication of smallpox Some believe that small changes in the way each of us in affluent nations lives our lives could solve world poverty. Consequences:
Evidence: The UK has seen a sustained rise in real GDP since the post-war period. However, currently the poorest fifth of society have only 8% of the total income, whereas the top fifth have 40%. Explanation: Causes: growth can benefit a small section of society more than others. Consequences: A wider wealth and income disparity those with assets and wealth will see a proportionally bigger rise in the market value of rents and their wealth, while those unskilled without wealth may benefit much less from growth. Increased unemployment Evaluation: It depends on the tax rates and the nature of economic growth May only be a short-term problem + economic growth can also be a force for reducing absolute and relative poverty Given that they are likely to experience higher tax revenues, government can address the problem through the payment of benefits Possible trickle-down effect: -Rising incomes of those at the upper income levels may result in greater consumption e. employing a cleaner or housekeeper, thus creating employment and higher income for those previously unemployed Conclusion: There are clearly some benefits of economic growth, however they are more visible in lower income and less developed countries. Economic growth provides the government possibilities to deal with many severe problems such as poverty, homelessness etc. However, there are also costs of economic growth, which the government can possibly solve with the appropriate use of policies targeting the various natures of economic growths. In conclusion, the benefits outweigh the short-term costs in the long run.
Costs and benefits of economic growth essay
Subject: Economics
Sixth Form (A Levels)
• A2 - A Level
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