BENEFITS AND COSTS TO ECONOMIC GROWTH
Benefits
Households
High incomes
High living standards
Bigger choice of goods and services
It creates employment and secure jobs
Governments
creates confidence in the economy
higher investment and consumer spending
Higher taxes to fund welfare services
alternatives may be found for non-renewable resources
additional spending on public goods
Firms
more goods may be exported
productive potential increases
there are more opportunities for wealth creation
there are higher profits leading to greater investment and future prosperity
Costs
Negative externalities
creates a pool of migrant workers, wandering from job to job in different parts of the country, becoming cut off from their roots and their families
souring crime and divorce rates and stress related illnesses becoming commonplace
increased pollution and greenhouse effect
increased traffic congestion
Income inequalities
economic growth may be achieved by some groups being exploited and suffering from poor living standards and working conditions
additional income may not be used to benefit households directly (military hardware)
income may be kept by a few
bigger difference between high and low income groups
Growth may not be substantial
may lead to the depletion of non-renewable resources
future generations might not benefit from the same rate of economic growth
people are living longer with improved healthcare funding
might be a shortage of labour and other factors of production
increasing population, which may make proving food for everyone a challenge
Opportunity costs
economic growth can work against other macroeconomic objects
control of inflation and reduction of imports
increased saving to facilitate the production of capital goods and fewer consumption goods being produced
in a global economy, likely there will be a rise in imports as more products are demanded (worsen trade deficit)
the government may have to take action to reduce inflation (raising interest rates) - possibility of recession if economy is overheating
if the government is actively promoting economic growth through expansionary economic policies, a budget deficit is unlikely to be reduced and spending is unlikely to be as high in certain parts of the economy (library services and pensions)