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The advantages and disadvantage of trying to achieve higher economic growth

Executive summary

According to Ruane (2016), economic growth in a country can have both positive and negative impacts if not managed well. This research paper analyzes the merits and demerits of a high economic growth in nation where Ireland has been used as a country of reference. As the economy of Ireland was growing, there was the shift of attention on how to bring back the economy to a sustainable and long-lasting economic growth (Ireland, 2013). The country’s economy was under economic challenges, from averting dangerous economic policies to ensure there was constant economic growth. Some debates emerged on whether the country could sustain economic growth while tackling the economic challenges by putting in place some drastic measures to change the face of the economy (Ireland, 2013).

Many questions have been raised about the value of continuous economic growth in GDP especially when used as a measure of the wellbeing of the citizens. According to (Ruane, 2016). some studies show diminishing benefits of economic growth in the long run but also it is crucial to support continuous growth of the issues that has to do with the wellbeing of the citizens. These may range from healthcare services and employment opportunities to education and improvement in the quality of life, with these, there is a need for the government to ensure a range of policy goals on economic, environmental and the social issues of concern (Gurbanov, Bilan, and Strielkowski, 2015).

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It is thus important that nations with vast supply of natural resources to have a management plan on how they plan to better their economy in such a way that there will be no negative implications that might be caused by the economic developments (Gurbanov, Bilan, and Strielkowski, 2015).

With many basic scarce government resources and services under constant pressure, ensuring sustainable economic growth may call for absolute decoupling in the goods and services production from their long-term effects (Ruane, 2016). It then means that too much consumption directed to the resources available in a country in a manner that is sustainable even if it means improving the efficiency in the way resources are consumed or even by employing newer production methods and the looks and composition and value of the products (Fisher, 2013). At times it may call for avoidance of the breaches in crucial thresholds to the level whereby natural assets may not be replaced and at times lost the ability to support any economic activity in the country. There should include consistent commitments with the aim of avoiding dangerous economic policies so as to ensure the reduction in the pressure put on the government and the taxpayers even in the concentration of economic expansion.

Introduction

(Mishel, 2012), defines economic growth as increase in the Gross National Product (GNP) per head without affecting the structure of the society. In the past counties were striving for faster economic growth but latter realized that there were some negative implications that were being associated with the increased economic growth. According to the figures released by the Central Statistics office, Ireland’s economy was characterized by a GDP increase of 7.8% in 2015, which contributed to the country being recognized as one of the fastest growing economy in the European region (Fisher, 2013).

With the continuous increase in Economic growth in the country, there has been prosperity and improved wellbeing of the citizens and an increased range of goods and services that customers can choose from. In any economy, this kind of prosperity stimulates technological advancements to ensure sustainable production of goods and services. It also enables the existence of other drivers of the wellbeing of the citizens regarding improvement in healthcare provision, overall living standards as well as education (Ruane, 2016).

Despite the benefits that are enjoyed from increased economic growth, there are numerous challenges that fast growing economies encounter as they strive to sustain their economic growth. These challenges include dangers of inflation and poor resource management in an economy when it comes to managing national assets that are available for the main reason of ensuring the wellbeing of the citizens and economic growth (Gurbanov, Bilan, and Strielkowski, 2015).

Most of the empirical evidence shows that Ireland is employing absolute measures for ensuring a balance in the economic growth, but this is also emerging as a challenge to the nation in its attempt to sustain the fast growing economy (Fisher, 2013). Moreover, some evidence show that the production policies employed by Ireland express the shift in the production location, whereby many goods that are consumed in the country are now being produced in some countries.

Benefits of trying to achieve high economic growth

Ireland has benefited in a number of ways due to its increased economic growth over the past few years. These benefits have aided the country to be able to compete with other countries in the global market. Some of the benefits that Ireland nation has earned from trying to achieve a higher economic growth include:

Increase in GDP per capita

Ireland economy has in the last years enjoyed an increase in GDP due to its efforts of trying to achieve a higher economic growth. Increase in GPD has attributed an increase in the wages and profits in the citizens of the nation. (Gurbanov, Bilan, and Strielkowski, 2015) say that an increase in real GDP increases the value of the national expenditure and output. Thus, citizens are able to enjoy a wide range of goods and services and also better living standards.

Increase in employment opportunities and poverty reduction

Economic growth calls for the high demand for labor, food supply, improved healthcare and housing and access to financial support. With the constant increase in economic growth of Ireland, investors have always been motivated to invest in that nation due to the good policies, security and government support. Due to this, employment opportunities have been created thus enabling people to earn income from the services and goods they provide. With the increased job creation in the country, poverty levels have decreased as people are able to work and earn a living. A reduction in the social vices has also been observed in the nation due to the fact that people are able to engage themselves in moral jobs that are readily (Boglioni, and Zambelli, 2016). Compared with Ireland, counties with poor economic growth are faced with challenges of increased poverty levels and unemployment, thus it is right to say that Ireland enjoys the benefits of increased employment and reduced poverty due to its growing economic growth.

More public and merit goods

According to Mishel, (2012), a growing economy is very keen in ensuring more tax revenue are employed in the public and merit good like the schools, hospitals, and roads. With these, the economy of Ireland has grown steadily since people receive better medical services, better education, improved infrastructure and a better trading environment. Due to Ireland’s attempts to achieve a higher economic growth, there were improvements in the public services in that the government spent more taxes on crucial public services like education, health, and housing (Schwartzman, 2015). With the improvement in the health sector, there is increased quality of life for most of the diseases will be treated thereby increasing the life expectancy of the citizens. Increased educational standards provide the citizens with diverse and quality skills and literacy level improvements (McGrath, (n.d.). Thus, nations that strive to achieve a higher economic growth present their citizens with an opportunity to enjoy more public and merit goods.

Improved Standards of Living

The standard of living can be measured by the levels of income improvements, which include absolute and relative, the health status of the individuals also increased due to the government commitments in building healthcare facilities. Due to the high economic growth in Ireland, citizens have better living standards as compared to nations that do not strive to achieve a higher economic growth. The increased economic growth has also enable the government to be able to build and manage a wide range of social amenities that attribute to the improved standard of living.

Positive externalities

McGrath,(2015) says that increase in the number of hospitals and schools is a good measure of healthier and proper educated individuals in a country that are associated with other benefits economically, for instance, it ensures effective labor force, and with this, the country is sure enjoying aggregate supply in the long run. Ireland economy has been enjoying positive externalities due to its fast growing economic growth. Problems such as food shortage that are rampant in deteriorating economies have not been reaching this nation, thus it has been benefiting from positive externalities due to its increased economic growth.

Decreased borrowing by the government

Due to the high revenue collected by the government, a drastic reduction in the Ireland’s government borrowing has been observed (Fisher, 2013). The high economic growth has led to higher revenues from the taxes, less expenses in solving national disasters such as food insecurity and a reduction in the government expenses trying to curb insecurity and bad vices in the society. This has enabled the Irish Government to decrease its borrowing both internal and external.

Disadvantages of High economic growth

Despite economic growth having benefits as discussed above, there are some demerits that are also associated with a high economic growth. Ireland has been benefiting from the increased economic growth, but also there are some problems that the country has been experiencing over the years due to the high economic growth. These include:

Externalities of development

The increasing growth of the Irish economy has been attributing to increased inequality among the citizens. The inequality comes due to wealth and opportunities being distributed to the learned people in the society, whereas the illiterate are left in poverty and in poor living conditions (Gurbanov, Bilan, and Strielkowski, 2015). Resources are also not equality distributed, and they are mostly found in areas where there is plenty of economic activities. According to Ruane, (2016), there are over 90 000 people in Ireland who have no homes, jobs and are still in deep poverty despite the country enjoying huge economic success.

Increased inequality

The increasing growth of the Irish economy has been attributing to increased inequality among the citizens. The inequality comes due to wealth and opportunities being distributed to the learned people in the society, whereas the illiterate are left in poverty and in poor living conditions (Gurbanov, Bilan, and Strielkowski, 2015). Resources are also not equality distributed, and they are mostly found in areas where there is plenty of economic activities. According to Ruane, (2016), there are over 90 000 people in Ireland who have no homes, jobs and are still in deep poverty despite the country enjoying huge economic success.

Rise in crime levels and societal evils

The increased economic growth in Ireland has attributed to increased crime and social evils. Rise in social evils can be ascribed by the congestion of people in towns and cities that come up as a result of increased economic activities in n area. Industrialization, which is a key aspect to economic growth brings people from different cultures and backgrounds together, thus breeding up social evils and increasing crime rates. Ireland has been fighting to remove social evils such as prostitution from its cities but with no success. Thus, the country has been affected in a negative manner due to the increase in crime and social evils.

Deteriorating Welfare

Ruane, (2016) defines welfare as the overall wellbeing of a group of people or an individual. Despite some Irish people having material wellbeing, their social welfare, and quality of live and living standards do not change. Due to lack of cheap housing, citizens , living around the major cities have been forced to look for housing in far places where they spend a lot of time travelling and in traffic. In addition, the growing economic growth has been calling for long working hours among the employees, working on holidays and taking shorter breaks in order to counter the competition among industries. This has thus been depriving employees of their time to sleep, hence increasing their stress levels.

Diseases affluence

Even though economic growth has improved the health sector in Ireland, there has been some trends in the increase in the number of illnesses and diseases that are due to increase in prosperity. For instance, obesity in that the modern lifestyles and diets have to obesity among the citizens of Ireland since most of the people now desire to lose some weight (Ruane, 2016). It is also possible to argue that issues like obesity and stress kind of problems are not directly related to economic growth.

Conclusion

In conclusion, is true some benefits of economic growth like improved living conditions, increase in quality of education as well as improvements in the healthcare sector are evident in Ireland. Economic growth has enabled Ireland to handle serious problems relate to poverty, like homelessness and poor or lack of the basic amenities and improve the standards of living among the citizens (Kincaid, 2002). Moreover, the high economic growth tends to leave out some other important goods and services that do not have monetary value but have a great impact on the overall wellbeing of the economy and the citizens. These include things such as moral values and social well-being of people.

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Even though the advantages of striving to attain higher economic growth are evident, there are other clear issues suggesting that economic growth has brought with it some serious environmental, social and economic problems that may reduce living standards of people (Gurbanov, Bilan, and Strielkowski, 2015). It can be believed that economic growth may bring unhappiness but then, there is need to reduce the problems related to economic growth and ensure it only ensure an increase in sustainable standards of living in Ireland and other countries striving to have higher economic growth.

Recommendations

Economic growth should be managed in a manner that ensures it reduces the problems it is associated with like inequalities, lifestyle diseases and other forms of problems (Liu, 2015). This can be achieved through the development of a plan that will aid to oversee the economic growth process so as to ensure that that the economy is growing in the desired manner.

Pollution issues associated with higher economic growth should be solved though encouraging use of environment friendly sources of fuel and raw materials. Governments should ensure that they have environmental laws that should be followed by industries to ensure that there is minimal pollution in the environment.

Finally, faster growing economies should ensure that they have laws that guide working hours of people, equality in resource distribution and improvement in the education system. This will ensure that the social well-being of people is addressed, thus issues to do with stress and lifestyle diseases can be handled. With proper distribution of resources, congestion of people in specific places will reduce and thus a uniform economic growth will be achieved.

References

  • Boglioni, M. and Zambelli, S. (2016). European Economic Integration and Comparative Advantages. Journal of Economic Surveys.
  • Fisher, P. (2013). Corporate Taxes and State Economic Growth. The Iowa Policy Project.
  • Gurbanov, R., Bilan, Y. and Strielkowski, W. (2015). Economic Advantages and Disadvantages of Turkish EU Accession. Montenegrin Journal of Economics, 11(2), pp.7-30.
  • Ireland, P. (2013). Stochastic growth in the united states and euro area. Journal of the European Economic Association, 11(1), pp.1-24.
  • Liu, X. (2015). Trade Agreements and Economic Growth. Southern Economic Journal, 82(4), pp.1374-1401.
  • Mazerov, M. (2013). Academic Research Lacks Consensus on the Impact of State Tax Cuts on Economic Growth: A Reply to the Tax Foundation. Center on Budget and Policy Priorities, June 17.
  • McGrath, P. (n.d.). The Relationship between Human Capital and Economic Growth in Ireland. SSRN Electronic Journal.
  • Mishel, L. (2012). Understanding the Wedge Between Productivity and Median Compensation Growth. Working Economics.
  • Ruane, F. (2016). Ireland-A Remarkable Economic Recovery? Australian Economic Review, 49(3), pp.241-250.
  • Schwartzman, S. (2015). Economic Growth and Higher Education Policies in Brazil. International Higher Education, (67).
  • Vega, A., Corina Miller, A. and O’Donoghue, C. (2014). Economic impacts of seafood production growth targets in Ireland. Marine Policy, 47, pp.39-45.

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