Economics Paper on Sustainable Economic Growth
Economic growth is the increase in real output where real output is often associated with the Gross Domestic Product (Alier, 2009). According to Jackson and Senker (2011), measuring real output involves calculation of the GDP at constant prices to eliminate the effect of inflation. Martine and Alves (2015) suggested that economic sustainability is growth in an economy with non-declining economic welfare forecasted into the future. Similarly, Borgonovi (2007) stated the concept of economic welfare not only concerns income in monetary terms but also involves the environment. The environment plays a crucial role in economic growth. Over consumption of limited natural resources can cause environmental degradation (Chistilin, 2010).
Sustainable economic growth considers the future generation and ensures a maintainable rate of growth such that natural resources are not depleted nor global warming increased (Gauvin, n.d.). There exists a notable trade-off or conflict of interest between the rapid economic growth rates experienced today and growth in the future (McCombie & Thirlwall, 2016). According to Harrington (n.d.), the focus of a sustainable economic growth is the maintenance of physical capital that generates economic welfare.
Aggregate demand continues to increase as world economies experience positive economic growth rates (Azizov, 2015). The amounts of consumer spending continue increasing, leading to high demand levels of output; thus, maintenance of physical capital at minimum levels is important (Hubert, 2011).
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