Economic growth should enable how does investment increase economic growth rise in living standards and greater consumption of goods and services. However, this simplistic emphasis on economic growth is often criticised because living standards depend on many more factors than just increasing real GDP.

GDP but also statistics such as literacy and healthcare standards. Increased national output means households can enjoy more goods and services. For countries with significant levels of poverty, economic growth can enable vastly improved living standards. For example, in the nineteenth century, absolute poverty was widespread in Europe, a century of economic growth has lifted nearly everyone out of this state of poverty. Economic growth is particularly important in developing economies. A stagnant economy leads to higher rates of unemployment and the consequent social misery. Economic growth leads to higher demand and firms are likely to increase employment.

With higher growth, incomes and profit, the government will receive more income tax, corporation tax and expenditure taxes. The government can then spend more on public services. Economic growth helps reduce debt to GDP ratios. Despite very few years of budget surplus, economic growth enabled a reduction in the level of debt to GDP. Elected politicians have a vested interest in higher economic growth. Higher growth leads to improved tax revenues which can be spent on long-term public sector works, such as improved transport and communication.