Advantages and Disadvantages of Growth Advantages of Growth Growth affords each person a higher material and social level of living. When real per capita growth is greater than 1, real output is rising faster than the population is growing and the population's level of living is increasing. As the level of living rises, people can enjoy more of the finer things in life, e.g., arts and entertainment, which raises their standard of living. When real per capita growth is less than 1, real output is not growing so fast as the population and the population's level of living is decreasing. Generally, a decrease in the level of living also reduces a population's standard of living.
Growth permits the formation of social overhead capital or infrastructure.
Social overhead capital facilitates and promotes the free and easy access to markets and the viability of exchange through specialization and division of labor. As real output grows, more resources can be set aside to improve roads, waterways, airport facilities, and telecommunications that improve the rapidity of trade and commerce in and among nations. An efficient judicial system expedites the enforcement of contractual agreements necessary for trade and development. When a society has a fair and efficient mechanism for enforcement to the breach of contract, economic participants will more likely honor their contracts and trade and commerce enhanced. If contracts can be easily broken, with no penalties, then fewer parties will enter into contracts and the flow of trade will slow.