Benefits (advantages) of economic growth
- It facilitates the exploitation and utilization of the idle local resources. This increases the level of national income in the economy.
- It increases government revenue through taxation. Economic growth widens the tax base inform of numerous production activities set up hence generating more tax revenue to the government, The revenue realized is used to construct social and economic infrastructure like hospitals, roads, schools etc.
- It leads to a fall in the general price level of goods and services hence improving the standards of living of the people. As the economy grows, a variety of goods and services are produced and this results into a fall in the general price levels hence an increase in the volume of commodities consumed.
- It facilitates technological development in the country. Economic growth encourages the use of modem production techniques through inventions and innovations hence increasing efficiency in production.
- It improves the balance of payment position of the country. As the economy grows the production of goods and services for both the domestic market and for exports increases. This helps the country to save and earn foreign exchange hence better balance of payment position.
- It leads to an increase in employment opportunities. This is in form of increased resource utilization and other economic activities set up. This increases the income of the people.
- It leads to the development of social and economic infrastructure. As the economy grows, there is development of social and economic infrastructures in form of roads, schools, hospitals, financial institutions etc. so as to facilitate trade in the economy.
- It promotes urbanization and industrialization of the economy. This is as a result of increased number of production and economic activities.
- It reduces the dependence of the economy on other economies. As the economy grows, per capita income raises and this leads to an increase in self-reliance and sustenance of the economy.
- It improves the standards of living of the people. This is due to increased production of a variety of goods and services at reduced prices in the economy. This increases consumption and utility maximization by the people. .
- It reduces income inequalities in the economy. As the economy grows, it is possible for the government to redistribute part of the increased employment opportunities and income through the use of appropriate government policies like progressive taxation.
- It increases the monetization of the economy. This is because economic growth promotes trade and commerce in the economy.
- It breaks the vicious circle of poverty. As output expands, savings and incomes increase there by breaking the vicious circle of poverty .
- It promotes social cultural transformation. As the economy grows there is a change of life style of people as a result of increased incomes. This helps to break the remove the high levels of conservatism and backward cultures which are obstacles to development.
- Promotes development of labour and entrepreneurial skills
- Widen consumers’ choice
CATEGORIES Economics
TAGS Dr. Bbosa Science
