On the face of it, economic growth is exeedingly beneficial to an economy, with a rise in GDP comes higher employment rates, higher healthcare standards and generally a higher standard of being across the population. But on the other hand, the trade off for all this growth is damage to the environment and potentially a greater inequality of income, whether it be in the same country or abroad.
There are two sides to economic growth, on one hand, people in developed nations benefit from more infrastructure, better food, clothing, more luxury items etc., whereas a by-product of this all it pollution caused by more and more production and consumption, greater stress caused by a more strenuous lifestyle, a higher rate of distruction of our natural resources and a greater divide between the rich and the poor (arguably) as the rich get richer and the poor get poorer.
This last point is disputable as some people argue that economic growth benefits everyone as goods get cheaper as firms expand and markets become more crowded, thus helping the poor to survive. They also say that as firms expand to handle the new consumption that it provides employment for the poor. But some oppose this and claim that as firms expand, the educated get employed and the firm replaces the un-skilled worker with new machinery they can invest it, thus reducing the amount of employment for unskilled workers and therefore reducing economic welfare.
Economic welfare is maximise when marginal utility is maximised the with money available in the economy, this mainly means that economic welfare is maximised when all needs are filled and all money is spent meaningfully and with purpose. This can be achieved through a redistribution of income as poorer people can derive more marginal utility from £1 than a rich person can.
Wealth has a direct correlation to longevity, as a wealthier human will have better access to better, healthier food, gym memberships, better healthcare etc. Using this model one can assume that economic growth would lead to an increase in longevity.
“Growthmania” is a concept coined by an American economist called Herman Daly, and principaly states that unbridled, ever lasting growth, is not only obtainable but it the main target of an economy. The concept of “growthmania” is rivalled by many, as there are many people in the world, including developing nations, who are not the beneficiaries of economic growth. Those in developing nations suffer from climate and environmental changes that are brought on from over-consumption from developed countries.
The concept of “Growthmania” does not consider the affects of increasing marginal costs compared to decreasing marginal benefits. Due to the law of diminishing marginal return, eventually, people will derive very little utility from the goods/services they produce, and at this point, the disadvantages of growth will overcome the benefits and economic growth may infact be harmful to the economy, in this case, monetary policies may need to be put into place to deflate the economy.
Economic growth may not benefit an economy if the economy grows at a faster rate than the infrastructure can handle, thus the growth will be unsustainable and the expression ‘the bigger the boom, the bigger the bust’ will come into effect. If the economy grows unsustainably then the economy will overheat due to not being able to handle all of the demand, and will sink into a recession and ultimately a slump. Therefore, the strength of the economic growth will have an impact of it’s benefit to the economy.
To conclude I would say that economic growth can be extremely key and beneficial to an economy, but only if it comes in the correct form, i.e. if it is an increase in consumer goods AND capital goods, and if the growth comes at a sustainable rate so as to not cause the economy to fall into recession. Economic growth also accelerates the usage of non-renewable resources such as oil and land. But growth also brings about an increase in utility derived across the whole economy, which is the main objective of any economy, so on the whole I would say economic growth is usually a good thing, especially in the short term.