Cost and benefits of economic growth

1. BY
NAZISH KHALID

2. Economic Growth
Factors of Economic Growth
Benefits of Economic Growth
Cost of Economic Growth

3.  Increase in total output of the
economy
 Measured by country’s GDP
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4.  Human Capital
 Capital Goods
 Natural Resources
 Entrepreneurship
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5.  Human Capital:
It includes education, training, skills, and
healthcare of the workers and the value that
they bring to the country’s economy.
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6.  Capital Goods:
All of the goods that are produced in the
country and then used to make other goods &
services
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7.  Natural Resources:
All of the things found in or on the
earth; “gifts of nature”
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8.  Entrepreneurship:
People who take the risk to start and operate
a business
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9.  Higher employment
 Improved business confidence
 Increased tax revenues
 Improved living standard
 Higher investment
 Potential environment benefits
 Improvement in welfare
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10.  Higher employment:
With higher output firms tend to employ more
workers creating more employment.
 Improved business confidence:
Economic growth normally has a positive impact
on company profits & business confidence
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11.  Improved living standard:
Growth leads to better living standard and
low poverty rates.
 Increased tax revenues:
Economic growth creates higher
tax revenues providing the government with extra
money to finance spending projects .
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12.  Higher investment:
Higher consumer demand leads
to higher investment level.
 Potential environment benefits:
Richer countries have more resources
available to invest in cleaner technologies.
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13.  Improvement in welfare:
Increase in economic
growth of a country
leads to its ability to
provide support for
elderly, homeless and
orphaned people.
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14.  Inflation
 Environmental concerns
 Inequalities of income & wealth
 Balance of payment deficit
 Loss of land
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15.  Inflation:
If AD increases faster than AS then economic
growth will be unsustainable. The output gap will
narrow causing inflation to increase.
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16.  Environmental concerns:
 Pollution
 Over farming reduces productivity of soil
 Deforestation
 Damage to eco-systems
 Non-renewable resources(finite resources)
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18.  Inequality of income & wealth:
economic growth often rewards the strong but
gives little to economically weak hence resulting
in increased wealth gap.
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19.  Balance of payment deficit:
Increased Economic growth causes an increase
in spending on imports therefore causing a deficit
on the current account.
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20.  Loss of land:
Increased economic growth results in loss of
available land
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21. Economic growth is important for every country
to cope with the developing world. But as much
as benefits we receive from this growth there are
the costs and circumstances which cannot be
ignored.
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