chapter 26

chapter 26 - Chapter 26 Benefits of economic growth Rising...

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Chapter 26 Benefits of economic growth Rising average living standards Alleviation of poverty o Many do not share directly in the growth o But redistribution is easier in a growing economy Political power is also connected to economic growth – the richer you are the more powerful you have a political power. Cost of economic growth Sacrifice of current consumption – some growth comes from consuming less now, and consuming a higher output in the future. – opportunity cost (higher future consumption allows for a future economic growth) Social costs of growth o Growth usually involves the displacement of some firms and workers o An economy is tremendously dynamic – new and old sectors are created and closed off – causing a huge amount of turnover in the economy in terms of employment - Economies that grow faster tend to have a larger turnover. o This process involves real transition costs – workers moving across different sectors and regions – workers makes that transition, and
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chapter 26 - Chapter 26 Benefits of economic growth Rising...

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