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June 2015
Essay 3
The economies of Mexico, Indonesia, Nigeria and Turkey (MINT) have all been identified as the next main emerging market economies with high rates of growth. However, there are warnings that what goes up will eventually come down.

12 Evaluate the view that living standards must be rising in economies which are
experiencing economic growth.
[25 marks]

Economics growth is an increase in equilibrium nation output in an economy over the period of time. There are many quality life factors that affect living standards that are healthcare, education, and access to housing and many more. The different measurement of living standards are index of human development (HDI), GDP per capita and GDP.
Firstly, increase in GDP this indicates that more goods and services are being produced in the economy. As the demand for goods and services increases so does the demand for labour increases which means more individuals in workforce and many are earning higher incomes. This is shown through increase in GDP per capita which shows average increase in incomes in the economy, according to The World Bank Mexico's per capita GDP is $17,276 in 2016.. Higher income will lead to high levels of consumption will help to reduce occurrence of absolute poverty because individuals can consume better types of goods transferring from inferior goods to normal or luxury goods. However, GDP per capita does not show whether income is distributed fairly whereas Gini coefficient would represent whether there is income inequality or not. Often economic growth can lead to more income inequality because it benefits the richer since the countries usually have lower tax rates which will boost GDP whereas the majority will still struggle with certain living standards because if it is a developing country the income of an average individual still will not be enough to change or affect their living standards.
As a country experiences economic growth there is more availability of jobs and opportunities for individuals, as there is demand for labour this means more individuals are in work environment. This provides more income tax revenue for the Government. Most countries such as Mexico have an advantage of resources which means there is going to be an increase export led growth. There is more corporation tax on export firm and even implement tariffs on imported goods, also the government can receive indirect taxes such as VAT because of increase in consumption. This will allow the Government to more tax revenue to spend on merit goods such as healthcare and education to improve living standards of the individuals because in the long run this will increase labour in the workforce and increased competition. In the long run this will shift the AD to the right from AD1 to AD2 increasing the price levels from PL1 to PL2 as well as increase in real GDP from Y1 to Y2
However firstly there is no guarantee that the government will spend the money on merit good because the increase in rapid economic growth can create more costs of living standards such as environmental pollution. As there is higher output will lead to increased pollution and congestion which can reduce living standards because it will create healthcare problems and increase in traffic jam such as in China during 2010 experienced on of the highest in CO2 emission being around 5.5 CO2 emission per capita. In the long run costs of non-renewable resources will affect the economy.
Yes, living standards will increases as the country experiences economic growth, Individuals will have better access to goods and services which will decrease relative poverty in the economy this will reduce the income inequality since there will higher consumption and more demand in the work force however in the long run if there is no increase in productive capacity it might lead into inflation. Another reasons why economic growth of an economy will increases living standards because government will have more tax revenue which means more investment in infrastructure and improve the commute for many to work reducing geographical immobility but other costs can arise such china experience a rapid increase in pollution due the high use of non-renewable resources and causes issues in the long run for the health of many individuals nevertheless the poorest countries often have bad pollution because they cannot afford to reduce it so as long there is economic growth this will encourage government and individuals to use their disposable income to protect environment.
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