Economic Growth for Developing Country

Readers Question: Comment on whether rapid economic growth would always be beneficial for a poor, developing country.

Economic growth would certainly have many benefits for developing country

• Higher incomes
• Higher tax revenues which could finance public services
• Lower unemployment
• Attracts foreign investment.

However, the dangers of ‘rapid’ economic growth include:

• Inflationary pressure. If demand rises faster than supply, then supply bottlenecks will lead to higher prices, unsustainable growth and a balance of payments deficit.
• Environmental costs. Use of scarce resources and pollution

It depends on the type of growth.

• Is is export led?
• Are the fruits of growth equitably distributed?
• Does supply expand with demand?
• Does inflation occur?

Related

• Does economic growth increase happiness?
• Evaluate whether economic growth is beneficial?