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The Steam Locomotive was invented in Britain in 1804 by Richard Trevithick, and its first railway line was in 1825. The invention of the Steam trains and ships was Britain's super power for international trade; Prior to steam powered locomotion, only expensive, luxury goods such as Spices and precious metals were imported to offset the high costs of transporting them across continents.

Economic growth means a more able economy, due to a greater potential output. How the economy chooses to use that extra potential output affects other international economies; if the economy is an "Open economy" the effect is greater.

An "Open economy" such as the United Kingdom is one that Exports and/or Imports its goods; the UK survives on being an open economy. An Open economy is highly Integrated with the global economy. For this reason such an economy is influential to other countries' economic behaviour.

A "Closed economy" such as North Korea, whom only trade with China as of late, has tight or no trade between other nations.

The effect within the macro-economy of growth.

^ above shows the effect of Economic development; The shift In Long Run Aggregate Supply means more potential for a country to output goods and services, wither to themselves or to other economies through trade.

 With all else the same, the outward shift in LRAS causes a deflationary pressure, causing Inflation to decrease from PL1 to PL2. The increase in available supply of goods and services means an extension in  Aggregate Demand; Consumers are encouraged to spend more and save less by the market changes since the price of goods are cheaper and they can buy more with their incomes.

This case of fall in inflation is considered good for the most part, since it is a fall in price level due to more available short run supply ad potential supply in the long run. Because there is greater potential to supply a good, this means opportunity for more vacant jobs, this is shown by the increase in potential full employment from YF1 on LRAS1 to YF2 on LRAS2. The obvious drawback is the possible increased pressure on suppliers/producers.

This type of deflationary pressure is known as Benign Deflation, meaning "nice Deflation".

Economic Growth and effect on Open economy countries

on the Exporter

In the case of a competing Exporter, if the price of their goods and services in their economy fall in price, they will likely experience a heavier demand for those goods by outside nations, since they want to import for a cheaper price. 

This can be good for the exporter country in the short run, Since they accumulate more money into the flow of national income, known as an Injection.

In the long run however, the influx of demand cannot be continually sustained, and suppliers experience pressure, in this case there exists a positive output gap due to an overshoot in demand, where aggregate demand is greater than what the economy can supply in the long run (LRAS). this is caused by the Multiplier effect.

 at this point, consumers are draining the scarce good. World oil prices were stable at $110 a barrel from 2010, in June 2014 this dropped by more than a half to below $50 a barrel. "Brent Crude" oil prices fell to less than $50 a barrel, "US crude" fell to less than $48 a barrel, this was cause by what was described as "Surging US Production" (i.e. economic growth)

^ chart of oil prices for Brent Crude oil, $/barrel

whilst this was happening, the oil Consortium OPEC were not planning on cutting production. essentially what this meant was that global supply for oil became, for a short while, elastic. As a result, consumers could exploit the low prices and fill their tanks of their petrol cars while the prices for United States oil were still cheap, and supply would be fed continuously by the oil Cartel.

On the Competitors

what this meant for competing oil supplying countries like Russia, whose oil prices did not fall at the time, was that they lost a majority of their energy revenues. Oil and gas account for 70% of Russia's export Incomes, much of this was lost when consumers went to cheaper Western prices. Because consumers had a more economical choice, Price elasticity of Demand for Russian Oil was elastic, so they could not cut off supply to bump up the price to compensate for loss of revenue. Russia also saw its interest rate shoot up to 17% as a result.

"If we cut, the importer countries will increase their production and this will mean a loss of our niche market," said Energy Minister Alexander Novak.

Russia became left without options but to hope for US prices to cease falling, and for every $1 US oil fell, they lost about $2bn in revenue. World bank warned that if prices did not recover, Russia could face an economic shrinkage by 0.7% in 2015.

in short, Economic growth is beneficial in the short run, since, it is generally a sign of prosperity and willing spenders which are key, it reduces unemployment and increases a currency's spending power. However, the influence it can have on demand by consumers can be potent because of the multiplier effect, and, in the long run, be harmful to both the an open exporter  and their competitor. If not regulated, goods are quickly drained, producers buckle under high pressure leading to economic uncertainty, businesses' confidence become on edge. A monetary policy may be enforced to tackle this, namely, increasing the interest rate will encourage consumers to spend less excessively and save more, as they get greater reward.

Ambrose Evans-Pritchard writes that if Europe’s elites seem nonchalant about the deflation threat staring them in the face, it is because they do not share the Anglo-Saxon and Japanese orthodoxy that letting it happen is an unforgivable policy failure.

Paul Krugman finds it depressing that even Mario Draghi says things like “the fact that inflation is low is not, by itself, bad; with low inflation, you can buy more stuff. ” Don’t we teach students in Econ 101 exactly why that’s a naive fallacy, that lower inflation also means lower growth in earnings, and that the cost of inflation has nothing to do with reduced purchasing power? Krugman also picks up on the statement that “[deflation] is what we have to fear.” Wow. Maybe not in Econ 101, but I thought every professional economist understood that there isn’t a red line at zero inflation, so that low inflation becomes a potential problem if and only if it crosses zero.

Dean Baker writes that the decline in the inflation rate from a low positive to a low negative is a non-issue. The inflation rate is already lower than would be desired, any further fall makes matters worse, but crossing zero means nothing. Accelerating deflation could be a problem, but we have seen exactly zero instances of this phenomenon in the last 70 years in wealthy countries. Paul De Grauwe notes that the consumption-postponement effect does require prices falling. Only if consumers actually expect prices to decline will it start operating. But the debt deflation dynamics (and the real interest rate channel) is already working since this effect does not crucially depend on inflation being negative. It starts operating when inflation is lower than the rate of inflation that was expected when debt contracts were made. 

Good and bad deflation: then

Gary Shilling writes that there is an important distinction between good deflation caused by excess supply and bad deflation created by deficient demand. Good deflation is the result of new technologies that power productivity and output as the economy grows rapidly and as supply outpaces demand. The bad kind stems from financial crises and deep recessions, which increase unemployment and depress demand below the level of supply.

Ambrose Evans-Pritchard reports that the BIS study by Claudio Borio and Andrew Filardo shows that much of the 19th century was an era of "good deflation": gently falling prices amid productivity gains and flourishing world trade. Britain was in deflation for 51 years between 1801 and 1879, the era of British economic ascendancy. German prices fell 2% from 1880 to 1913 yet catch-up growth was a blistering 4% on average. But you can cherry pick centuries to make any point you want, and it is highly suspect to lump together chunks of time that have all kinds of ups and downs within them and lose all historical texture. The 1770s tell a very different tale. Britain imposed ferocious deflation on the North American colonies after the debt build-up of the Seven Years War, triggering a depression that caused penury across the plantations of Virginia and the Eastern seaboard. It poisoned feelings on the eve of the Revolution.

Source: Claudio Borio and Andrew Filardo. Correction: The graph refers to the 1929 episode, not 1926.

Frances Coppola writes that comparing the late 19th century with now is comparing apples and pears. During the Long Depression, the whole Western world was using gold as its currency, though sometimes with silver too. It was the period of the classical gold standard, which ended in 1914 with the financial crisis that preceded the outbreak of World War 1. Using a commodity such as gold as money means that the quantity of money in circulation remains fixed unless more gold coinage is produced. A falling general price level is therefore a sign that the economy is GROWING. More – or better – goods and services are being produced relative to the amount of money in circulation: the value of money rises and the price of goods and services falls. This is “benign” deflation.

Paul Krugman writes that the main case for arguing that deflation is OK is economic growth during the late 19th century. But this is a wrong model because the global situation was conducive to a high natural real rate of interest, making mild deflation much more sustainable than in today’s world. The late 19th century was marked by rapid population growth in the “zones of recent settlement”. In the United States, population grew 2 percent a year from 1880-1910, sustaining high investment demand. And the zones of recent settlement also offered an outlet for very large capital outflows from Europe.

Good and bad deflation: now

Claudio Borio and Andrew Filardo write that the extent to which any future deflationary episodes should raise policy concerns would depend very much on the nature of the corresponding deflationary pressures and the broader economic context in which they took place.

Lars Christensen writes that the economic development in Europe in the last five years has been characterized by very weak demand development. It has created ​​clear deflationary trends in several European economies. That certainly has not been good. It has been a bad deflation. However, the recent decline in European inflation we have seen is primarily a result of falling oil prices – that is a good deflation, which in shouldn’t be a worry.