Effects of Economic Growth

• Reduction in absolute and relative poverty. Strong growth will tend to increase the chance of the poor gaining employment and reducing the numbers of people living in relative poverty. The proceeds of economic growth may even be used to help the homeless, thereby reducing the numbers living in absolute poverty. 
• A more equitable distribution of income. With the increased taxation revenue generated from strong economic growth, the government may be able to provide more collective goods and services. Higher social welfare payments also become an option. 
• Improved standards of living. With more goods and services produced, material living standards certainly increase. Non-material living standards may also improve if economic growth contributes to more leisure time. 
• Negative externalities. The pursuit of growth may lead to atmospheric and water pollution as factories try to dispose of their waste and more motor vehicles clog our roadways. Growth could also lead to the depletion of our non-renewable resources. 
• Possible inflation. Inflation will occur if aggregate supply cannot keep up with strong growth in aggregate demand. 
• Possible external problems. The increased demand for imports usually associated with strong economic growth, will add to the trade deficit.