Positive
-
Higher GDP per capita improves living standards and economic development.
-
Increased employment opportunities
- ← as production and job creation are stimulated
- → contributes to lower unemployment, & potential lower income inequality
-
may cause an ‘accelerator effect.’
- ← due to Increased confidence from high growth rates
- → This is when investment increases due to the higher attraction caused by economic growth
Negative
-
Investment into new capital may cause a short-term increase in structural unemployment
- however, (in the long run) economic growth will increase employment opportunities in other industries.
-
Higher inflation
- ← as higher AD increases prices
- unsustainable rates of economic growth can also cause ‘bubble growth’
- (rapidly increasing prices in a single industry, that eventually crash)
-
Potential increase in imports
- ← due to increased consumer disposable income
- → may cause a worsened BOGS and increased CAD
- and worsened External stability
-
Increased negative externalities and social costs
- ← due to increased production (e.g. increased environmental degradation)