Public services

Increased availability of goods and services can be demonstrated by using a supply curve. As economic growth increases, a country will increasingly open up to international trade. Competition from both domestic and foreign goods and services will lead to an increase in the supply of goods and services. This will drive the prices of goods further and further down. In addition to the above benefit, economic growth can lead to improved public services as offered by the government.



In this regard, tax revenue collected by the government from improved domestic production and money earned from exports will enable it to spend more and more on important public amenities such as education and health. Improvement in the quality of health of a population can improve the quality of life of such a population though as will be seen later, it can have its own negative externalities. The life expectancy of the population will increase besides increase in the literacy level in the population. Improved educational standards will not only increase the literacy levels but will also increase the amount of skills, in the country.

Education and improved health standards are some vital determinants of happiness and citizens welfare. Increased economic growth will help in reducing the level of poverty and unemployment in an economy. As the economy grows, job opportunities will increase thus a reduction in the level of unemployment. This will further translate to a reduction in the level of poverty as there will be an increase in the level of real income earned by the population of a country. Unemployment causes a number of social problems such as alienation and crime among others which quality of life to the population in an economy.

It is however unfortunate to state that still there are some areas in countries with high economic growth rate that experience a high level of unemployment. Increase in starbucks value chain is one of the major factor that negates the benefits achieved from economic growth in the context of reducing unemployment and poverty levels in an economy (Richard, 2001, 98). Clearly, there are some benefits arising from economic growth but most of them tend to be short run. In this regard, the benefits are more visible in less developed countries or those that can be accused of having a low per capita income as opposed to high income countries.

In less developed countries, it is possible to employ economic growth in solving problems such as poverty, unemployment and others associated with basic amenities. On the other hand, economic growth in more developed countries has a weaker relationship with the quality of life in these countries. While it is not yet clear to state that economic development increases the level of satisfaction and happiness in a developed country, it can be argued that there exist various issues suggesting that economic growth has contributed to serious economic, social and environmental problems in many of these countries.

These problems have over the time reduced the quality of life in many countries though it does not necessarily mean that it has reduced the level of happiness in them. The challenge remains harnessing the level of economic growth to meet with the requirements of improved living standards and quality of life of the population in such an economy (Pope, 1992, p. 45). To start with, where there is absolute poverty in a given section of a population, economic growth increases the level of income in such a population and thus helping individuals to better meet their basic needs.

On the other hand, as the level of income increases, the returns of economic growth begin to diminish. The concept of diminishing returns as applied in economics hold true for economic growth just like it does to other macroeconomic and microeconomic variables. As economy starts to grow, there will be increasing returns to a certain point in time, constant returns for a given period beyond which it will experience decreasing returns.