An economy is meant to serve human wants. To that end it seeks to provide the appropriate mix of goods and services. Wants in turn are manifestations of more basic needs. They are a means to an end. The means can change but the wants remain the same. Economic growth arises from a number of factors. Primarily, economic growth is a measure of consumption. Greater consumption leads to greater economic growth. Growth also comes from innovation. New products and services are different methods of servicing needs which in turn create new markets.
The main concern of people lies in economic growth. Faster economic growth is good. Slower is bad. In a way this makes sense. The economy has to grow as fast as population growth in order to provide young people with the necessary jobs that they will need as they enter the work force. That at least is the theory. However a single minded focus on economic growth essentially ignores the issue of the type of economic growth. We can have (sometimes strong) economic growth without a necessary increase in job opportunities. An emphasis on encouraging capital intensive industries will lead to economic growth but will such industries provide wide scale job opportunities? Promoting service industries will again lead to economic growth but what kind of jobs will be generated? High income? Low income? What about prospects for advancement? Also consider that focusing solely on economic growth means that we are looking at the existing mix of goods and services and the companies that provide the same. It ignores new kinds of goods and services that may develop in the future and become economically important. For example, social media as an economic activity essentially did not exist a decade ago. Today they are multi-billion dollar businesses.
Then there is the question of distributing the fruits of economic growth. In India, the BJP government oversaw 5 years of strong economic growth. Their election slogan highlighted this and emphasized the future of "Shining India". Yet they were thrown out of office. Why? The fruits of economic growth were confined to a relatively narrow segment of the Indian population. A large majority saw their lives and well being worsening in the same period. This was a case of strong but blind economic growth. Part of the roots of the recent Arab uprising in the Middle East lies in economic growth which did not trickle down. Most people assume that strong economic growth alone will result in a general improvement in living standards due to a trickle down effect. But the empirical evidence does not support this argument. Most if not all the gains of economic growth are captured by a relatively small class of people who generally speaking are not interested in much trickling down. In country after country, government intervention proved necessary in order to ensure a more equitable distribution of the benefits of economic growth.
I believe that the purpose of economic growth is not in growth by itself. Economic growth is a means to an end. The end is (or should be) minimizing opportunity inequalities. An important component of this is reducing income inequalities. Poverty not only forces people to scramble to put food on the table and a roof over the head, it also prevents people from realizing their potential. That in turn lowers long term economic growth. High levels of poverty literally act as a brake on economic growth as it limits the opportunities available. It should also be noted that very high income levels often also inhibit people from realizing their potential. This is a reverse effect of a high poverty level as very high income levels lead to a satisfaction with the status quo and the sheer number of opportunities available can have a paralyzing effect.
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