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If technological progress is of type (c) and the new technology seems to be labour-saving, then 
unemployment will rise unless there is either a simultaneous 
expansion of demand
or a 
reduction in 
hours 
worked by each person. In the latter case there is no productivity increase associated with the 
technological progress. 
Technological progress may therefore stimulate growth but at the same time conflict with the goal of full 
employment. A further consequence of this could be that those people in work would benefit from 
economic growth in the form of higher wages, but those people put out of work by the new technology 
would be left with a lower income. There is thus a danger that the rich will get richer and the poor will 
get poorer in spite of economic growth, and this would be regarded by many people as an undesirable 
development.
7.7 External trade influences on economic growth 
An improvement in the 
terms of trade 
(the quantity of imports that can be bought in exchange for a 
given quantity of exports) means that more imports can be bought or alternatively a given volume of 
exports will earn higher profits. This will boost investment and hence growth. The rate of growth of the 
rest of the world is important for an economy that has a large foreign trade sector. If trading partners 
have slow growth, the amount of exports a country can sell to them will grow only slowly, and this limits 
the country's own opportunities for investment and growth. 
7.8 Advantages and disadvantages of economic growth 
Economic growth should lead to a higher income per head which can in turn lead to higher levels of 
consumption and a better standard of living. 
A country with economic growth is more easily able to provide welfare services without creating 
intolerable tax burdens on the community. 
There are possible disadvantages to growth, however. 
(a) 
Growth implies faster use of