Question

Discuss the benefits of long-term economic growth. What are the factors that contribute to economic growth? Provide your perspective as to what our society can do to enhance economic growth.

Answer 1

Economic growth means an increase in real GDP–an improvement in the national production, income and spending value. Economic growth essentially benefits from higher living standards–higher real incomes and the opportunity to commit more money to fields such as health care and education. Economic growth allows consumers to consume more goods and services, and to enjoy better living standards. During the Twentieth Century, economic growth was a major factor in rising absolute poverty rates and allowing life expectancy to increase.

Higher borrowing by Government. Economic growth produces higher tax revenues, and less money needs to be spent on services such as unemployment benefits. Hence economic growth helps reduce borrowing by the government. Economic growth also contributes to the reduction of debt-to-GDP ratios.
Public services strengthened. Through higher tax revenues, the government can spend more on public services such as the NHS and education e.t.c. This can allow higher living standards such as increased life expectancy, higher literacy rates and a better understanding of civic and political issues.

Discovering more natural resources such as oil, or mineral deposits will boost economic growth as this changes or increases the Production Possibility Curve in the country. Certain resources include natural gas, land, water, forests and. In realistic terms, increasing the number of natural resources in a country is challenging, if not impossible. Countries must take care not to deplete the supply and demand for scarce natural resources. Better land management will boost terrestrial productivity and lead to economic growth.

A growing population means an increase in worker or employee demand, which means higher work force. One downside of having a large population is that it can cause high unemployment.

An increase in human capital investment will improve the quality of labour. The increase in quality would lead to improved talents, abilities, and training. As skilled workers are more productive, a skilled workforce has a significant effect on growth. Another factor affecting the technology is its development. With the same rates of labor the technology could increase productivity, thereby increasing growth and development.