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Sustainable Economics

What is Uneconomic Growth?

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Uneconomic growth is any activity that adds to a nation's GDP in a single year but that represents a long term economic loss that is difficult to measure. Examples of uneconomic growth include:

Asset Bubbles

Dramatic increases in the price of investments or assets such as real estate may boost GDP on a short term basis. For example, real estate flipping can generate a great deal of taxable income that isn't producing real economic value. Such bubbles generally damage the economy when they burst.

Broken Windows

The broken window fallacy is a commonly cited type of uneconomic growth that involves GDP gains that result from negative things such as natural disasters and wars. Such spending is stimulative to the economy in the short term but generates debt without improving a nation's competitive advantage.


A dollar of economic output can cause far more than a dollar in damages to health, quality of life or the environment. For example, a factory that produces small plastic widgets but that dumps toxins into the water supply of a nearby town.
Overview: Uneconomic Growth
Growth that causes long term economic damage or costs that are not reflected in economic measurements such as GDP.
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