What are the main disadvantages of consumption based economic growth?

Question

Thanks

Answer 1

The garbage it produces?

I guess you're asking 'consumption' vs. other types of economic growth, like production efficiencies, etc.

Answer 2

Consumer based growth means that you are at the mercy of the consumer. As long as people are confident and feel like spending money, you will see growth. However, the first rumour that the chancellor is mentally ill, or looking tired and your stuffed.

As well as spending, economic growth can be tied to investment, population growth, exchange rates and interest rates. There is probably a whole host of other factors.

If you look at Japan you will see that for most of the post war years it has enjoyed over 33% economic growth. This is due to sseveral reasons, but when you consider how accomodating the Japanese banks have been to their national companies, it is easy to see that high investment enabled sustained, long term growth. Germany also enjoyed long term, post war growth, due to investment.

Consumer led growth, on the other hand, is short term. You will get money for selling your goods, but it will only offer short term economic growth. Unless profits are re-invested or the economic climate remains positive, your economy may be in for a sharp decline.

Ramble over, hope this helps

Answer 3

Because risk involved is higher, as assumptions are made for the markets sustainablity. Market may or may not sustain.
1. Cosumption based economic growth fuels higher volatility in
the market and gives a false sense of growth.
2. Foreign investments tend to increase on the MNCs taking profit to exploit higher consumption levels. Once when the consumption slumps, investments also are withdrawan. Market tumbles
3. When produce thus made, are unable to be sold, recession takes place. (Already Southeast Asian markets are examples)
4. Apparent purchasing power will also be lost, when once recession sets in.
VR

Answer 4

During an economic growth period, which is usually the Government producing statistics that argue their case, the greed factor creeps in, the want as opposed to need, and with more money than sense, greed demandsmoreof everything.

In addition to the fact that we consume more food and power than we need, lights to advertising crap keeps hundreds of hungery children in the dark and cold, take a look at the shoes on your feet, those wonderful 'must have' latest sports wear, which a family have been paid £2/$4 to produce, with a total production cost of no more than £10/$20, yet you paid £80/$160 for them. Meanwhile, that family, remember, the one on £2 a month, in the dark, cold and hungry, and now you know the disadvantages of consumption based on 'so called' economic growth.

My God, as he looks down upon us, we should be in awe at the ower of forgivness, for we are a wanton bunch of useless cretins, with our wants as these families,millions of them cringe in the cold, wet and hunger.

Be ashamed, be very ashamed...

Answer 5

Economic growth has one of three sources.
Additional Consumer spending (Avg family buys more goods & services)
Additional Consumers (more ppl) spending ...... or
Additional Govt spending

Based on your question, I will assume you are implying that the average consumer is increasing their consumption; case 1.

Such consumption is likely funded by decreased savings or increased debt. Such consumption is disadvantageous to consumers as less savings and possible increased debt exposes consumer to higher financial risk should one lose a job.

Consumption Based Economic Growth has the main disadvantage of being cyclical and unstable. A sudden shock like 9-11 caused a sudden decrease in consumer spending.

Economic growth through govt spending and pop growth is considerable more stable.

Answer 6

An economic answer is that consumption led growth actually normally causes inflationary pressures. It's the increasing scarcity of goods which drives growth in monetary terms and this leads to inflation.

Answer 7

Somewhere along the line the consumer is going to become overloaded. Resources are going to become depleted, excess waste and abuse of limited resources will eventually lead to implosion. Resulting in prices becoming unobtainable by the majority of peoples. Then all growth will stagnate unless other sources are plundered and other countries denied their own resources. All this will result in total economic collapse for expansion hast o be continual for consumption economic growth to be sustainable

Answer 8

what we are going through at the
moment is a massive consumer boom
based on consumer debt and
government overspend-we can't
compete in the world due to relatively
high wage rates and social security
spending-the us budget deficit is out
of control which is creating demand that
should not be there-see the price of
gasoline,metals,wheat etc

we've had these so called 'golden eras'
in the past and dare i say,they
have all ended in tears-this one will
be no different-it's not if-but when
if you know when-it is easy street for you
reality will come out of the blue in
the shape of banks tightening up
their lending rules and demand starts to
dry up-then the odd financial organisation
goes bust-that's what usually happens
have a good night

Answer 9

hiya agnes
there are many disadvantages to our consumer society. we become careless, greedy and uncaring.
as consumers in the developed world, we spend more than we need, our children are now consumers to a greater degree than us possibly, and the underdeveloped nations will continue to have less consumables simply because we have far too much.

developed nations will see an increase in:
obesity in the population; heart disease and diabetes. more younger people already die of drink related illnesses, this will also increase.
if we do not curb our spending, then alas, all these things will come true.
increase in diabetes

Answer 10

If resources go to consumption, as opposed to investment, that means that rather than putting resources towards future and larger growth, we consume them today.