How economic growth affect the society

Changes in social structures occurring during the process of economic growth can be considered direct consequences of this process, while other changes are caused by factors such as technological progress, that affect simultaneously social structures and growth. 

The impact of economic growth on poverty have been documented.The relationship is not direct. In some cases it can be positive ie economic growth leading to reduction in poverty in some cases it can be negative, ie economic growth leading to increase in poverty. The impact of economic growth on poverty depends highly on the inequalities that are prevailing in an economy. It will not make sense to measure poverty in a developed economy in the same way you would meausre it a developing country, because the definitions of poverty will definately differ.

If economic growth actually resembled the ‘extended reproduction’ coined by Marx and implicit in the steady state regimes of many contemporary growth models, one would not expect growth to have major social consequences. All economic magnitudes, including the standards of living of individuals or social groups, would be kept in the same proportion to each other so that only the scale of the economy would be changing over time.

Of course, economic growth is something more than a mere uniform change of scale of economic magnitudes. For a host of reasons, it is in the very nature of growth to modify economic structures and, because of this, to affect social structures and social relations. For instance, growth may modify the sectoral structure of an economy leading firms in one sector to close down and firms in other sectors to be created or expand. Growth modifies the structure of prices, thus affecting the standard of living of households in a way that depends on their consumption preferences. In other cases, growth will call on some particular skills, increasing the remuneration of those endowed with those skills and also, possibly, their decision-making power within society. Finally, growth may reduce the availability of public goods like clean air or water, requiring public intervention in order to maintain the adequate supply of environmental goods. In all these cases, it is not only the economic structure – i.e., the relative importance of sectors, labor skills, remuneration of factors, and size of the public sector – that may be modified by growth. It is also the whole social structure, that is the relative weight of socio-economic groups or the way in which individuals define themselves with respect to the rest of the society, that is affected. As a consequence, social relations that govern how individuals in a society interact with each other through explicit or implicit rules may also be modified by economic growth and may in turn affect the growth process itself.

Malvin (27)

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