- Term Papers, Book Reports, Research Papers and College Essays

Is Economic Growth Always Beneficial for Developing Countries?

Essay by   •  April 21, 2018  •  Research Paper  •  2,052 Words (9 Pages)  •  252 Views

Essay Preview: Is Economic Growth Always Beneficial for Developing Countries?

Report this essay
Page 1 of 9

Is economic growth always beneficial for developing countries ?

Is economic growth always beneficial for developing countries ?

Effects Of Economic Growth On Developing Countries

Economic growth became one of the major concerns of the developing countries after the Second World War. After the culmination and end of the colonialism, the colonized countries experienced low living standards and hence were termed undeveloped. This was due to the comparison done between the latter and the developed countries. Some of the countries termed developed were the United States of America, Canada, and Western Europe among a bunch of them (Barro, 189). Their living standards were reasonably better than the developing countries. Economic growth, therefore, became a challenge to the developing countries. The developing countries assume the name “developing” as measured by the criteria of per capita income. Their per capita income is considerably lower than those of the developed countries.

Economic growth is assumed to occur when the per capita income increases. Per capita income is the average income earned per one person in a certain country (Barro 321). It is obtained by taking the overall income or the Gross Domestic Product of a country and dividing it by the total population of the country, that is:

Per capita income =  Gross Domestic Product or Gross national Product
                                 Total population of the country
[pic 1]

Sometimes, the above criteria of measuring the economic growth or development may be inaccurate due to incorrectness in collecting the information and data needed in the computation. It has been established that the per capita per person is positively correlated to life expectancy, literacy levels and rates, number of professionals like doctors and teachers and other . For example Brazil per capita income as measured in 1985 was $ 1640; Italy’s per capita income of the same year was estimated to be $ 6520.

Economic growth has its own advantages and disadvantages to the developing countries. It is not obvious that economic growth will always reflect better results to a county. Sometimes it becomes detrimental in some aspects.

Benefits of economic growth to the developing countries

Economic growth is a widely used weapon to fight poverty in the developing countries. The overall growth of a country economy increases the sustainability of its entire population. Increase in the average per capita income earned in a country is very crucial to the developing economies. When per capita income is raised, the earnings are assumed to increase. With equal distribution of resources earned, the overall population garners more wealth and increases their income. This helps to alleviate poverty in these countries since the poor can earn more and move from the poverty bracket.

Unemployment is a glaring problem inherent in the developing economies. It is one of the main contributions towards low economic growth in all the countries. This may be stemming from high illiteracy levels and lack of employment avenues or industries. Most of the developing countries suffer from low literacy rates and less industrialization as compared to the developed countries. A stagnant economy can result to lack of employment opportunities. When unemployment is a big problem in an economy, less investment is experienced. People lack investment power due to low or no income and what they can afford is only for subsistent consumption. It is a common phenomenon of lack of saving culture in places where unemployment is rampant (Majumdar and Partridge, 77)Economic growth opens areas of employment and investment since literacy levels increase and more industries are constructed to create employment.

Economic growth if managed accurately becomes an efficient pointer of the living standards of a country. Developing countries have a lower living standard which can be improved by improving the overall economic growth of a country. With an increasing economic growth, more resources will be obtained and increase in salaries will be noted. When resources are abundant public services like health and education provision are improved. This implies that people can access improved health care and other services which are better than the previous. It increases the living standards of the people in the developing countries. Overall increase in salaries of the people is usually reflected when economic growth is achieved. Due to salary increases, more and better services can be accesses by the people and their living standard is raised.

Rise in the economy of a country can help improve the countries budget deficits. Economic recessions lead to high dependency rates and corresponding increase in budget deficit. A poor economy can cause insufficient sustainability of the people as a result of low government’s budget. The amount of government’s budget indicates the resources available and managed by the government. Increase in the latter amount improves the living standards of the people. Conversely, low government budget deficits leads to insufficient public services and poor infrastructure.  

Limitations of economic growth

Economic growth may not always be beneficial to a developing country. Economic growth comes with its own limitations in different fields like social aspects, environment and economic. This has been observed in most of the Latin American Countries which are termed developing countries in the west.

Loss of non-renewable resources

A country would always wish to have a higher productivity, but this can only be achieved by using more resources present in the country. Longevity of time of use of these reduces since they are constantly exploited and consumed with no replacement. The invention of nonrenewable resources like oil, forests and valuable minerals is usually a fortune for the developing countries. But they are utilized without limits to increase the economic growth which depletes them. This is a threat to the following generation and their sustainability in the future (Aghion, 39). Such resources are not renewable and therefore their abundance reduces with exploitation. Future generations may face scarcity of resources due to exploitation by the previous generation in the name of economic growth. The overall welfare of the people is therefore at stake when such cases occur. Sharp decline in economic growth will be a major problem for the future generations when the nonrenewable resources are completely used up.



Download as:   txt (13.1 Kb)   pdf (140 Kb)   docx (26 Kb)  
Continue for 8 more pages »
Only available on
Citation Generator

(2018, 04). Is Economic Growth Always Beneficial for Developing Countries?. Retrieved 04, 2018, from

"Is Economic Growth Always Beneficial for Developing Countries?" 04 2018. 2018. 04 2018 <>.

"Is Economic Growth Always Beneficial for Developing Countries?.", 04 2018. Web. 04 2018. <>.

"Is Economic Growth Always Beneficial for Developing Countries?." 04, 2018. Accessed 04, 2018.