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Economic Growth: Benefits and Disadvantages

Siman Bamforth^*

^*Correspondence:Siman Bamforth, Department of Commerce, University of Lincoln, Manchester,UK, Email:

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Description

The rise in the monetary worth of all the goods and servicesproduced in the economy during a given period of time isreferred to as economic growth. It is a particular kind ofquantitative measurement that depicts the potential rise in thevolume of commercial transactions occurring in the economy.By employing economic terminology like GDP and GNP, it maybe quantified in terms of the rise in the total market value ofnew goods and services created. Economic development is theprocess by which a country's general population's health, welfare,and academic standing improve. It also relates to the increasedoutput brought on by technological developments. It is thequalitative development in a nation's citizens' quality of life, andthe Human Development Index is the best tool for measuring it(HDI). The creation of employment opportunities, technologicaladvancements, living standards, living conditions, per capitaincome, quality of life, improvement in self-esteem requirements,GDP, industrial and infrastructural development, etc. are just afew of the factors that contribute to a nation's overalldevelopment.

Gross domestic product

The entire amount of goods and services generated over time inan economy is known as the gross domestic product (GDP). Thenational income, which accounts for the value of indirect taxeslike VAT, is also measured using GDP. When GDP is divided bythe population of a country, the result is GDP per capita. RealGDP and nominal GDP are two ways to describe GDP. Whilenominal GDP displays value without taking inflation intoaccount, real GDP reflects value that has been adjusted forinflation. The methods used to calculate GDP, the advantagesand disadvantages of GDP per capita, other approaches to gaugeliving standards, and a conclusion are all covered in the sectionthat follows. There are three ways to calculate GDP. The first isthe production approach, which determines the market value ofthe goods and services generated by the economy. The second strategy, known as the income approach, calculates the totalamount of income made by everyone in the economy. Next, theexpenditure approach, which bases its calculation on totalspending on goods and services, is another way to gauge GDP.Gross Value Added (GVA), Gross National Product (GNP), andnet national income can also be used to determine nationalincome in addition to GDP (NNP). GNP is GDP + income fromother countries minus income paid for foreign exchange, whileGVA is the value when GDP is reduced by indirect taxes andincludes subsidies.

Benefits of economic growth:

• Real GNI per capita growth, which raises people out ofextreme poverty, is a key factor in development outcomes (e.g.rising HDI)

• An effect on employment - Consistent growth encouragesemployment and helps to cut unemployment rates, which inturn aids in reducing income disparity.

• Economic dividend: Stronger economic growth will increasetax collections and decrease government spending on welfarebenefits connected to unemployment and poverty.

• Rising growth encourages new investment, such as in lowcarbontechnology, as a result of the accelerator effect. Bettergrowth might draw initiatives for foreign direct investment.

Disadvantages: The impact of inflation is the next majordownside of economic growth. A rise in aggregate demand willresult from economic expansion. If overall demand grows morequickly than overall supply grows, the economy will have anexcess of demand but a lack of supply. Consequently, producerswill often raise prices, and this condition is known as inflation.Overheating will happen when aggregate demand keeps risingbut the economy is already operating at its maximum productivecapacity. After that, there will be little to no rise in output andsubstantial inflation. Due to the UK's rapid economic expansionin the 1980s, inflation soared there by 10%. Increased inflationwill lower people's purchasing power.