What is Economic Growth?
- Economic growth is the increase of market value of the goods and services produced by an economy over time.
- Economical thinking is based on the idea of endless growth.
- It has historically been the case, even though there have been fluctuations.
- Endless economic growth is impossible.
- Economic growth is dependent upon factors of production.
- There are two kinds of economic growth, extensive and intensive growth.
- Extensive economic growth is the increase of use of natural resources and labor.
- This leads to increased economic activity and growth, but is limited by physical factors.
- Intensive growth is based on technological innovations and increase in productivity.
- Such as recycling or innovations that increase efficiency.
- However intensive growth is more difficult to achieve.
- Theoretically, endless economic growth is possible to achieve, through intensive growth.
- However, as more and more advanced innovations are required, it gets increasingly difficult for continuous intensive growth.
Pros
- Economic growth increases the standard of living.
- Technological innovations and increased efficiency.
- Consumer economy offers a wide range of options for people.
Cons
- Economies cannot reasonably grow endlessly, especially by continuing our historically extensive ways of economic growth.
- Distribution of gains from growth among people and states.
- Consumer economy is damaging to the environment.
- Economic fluctuation can have drastic consequences due to the size of the economy.