EC 151 Ch 12 - EC 151 Ch: 12 Production and Growth Economic...

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Unformatted text preview: EC 151 Ch: 12 Production and Growth Economic growth around the World Productivity: its role and determinants Economic growth and public policy The importance of long run growth Production and Growth GDP and its role Examine international data on real GDP per person Examine the role of productivity Consider the link between productivity and the economic policy Economic growth around the world Productivity: Productivity: its role and its determinants the amount of goods and services produced from each hour of worker's time Country's standard of living depends on its ability to produce goods and services How productivity is determined Physical capital Human capital Natural resources Technological knowledge The production function Case study: Are natural resources a limit to growth? Economic growth and public policy The importance of saving and investment People face tradeoffs because capital is a produced factor of production a society can change the amount of capital it has especially important when considering accumulation of capital it requires that society sacrifice consumption of goods and services in the present in order to enjoy higher consumption in future The importance of saving and investment Diminishing returns Diminishing return and the catchup effect the property whereby the benefit from the extra unit of an input declines as the quantity of the input increases the property where by countries that start off poor tend to grow more rapidly than countries that start off rich CatchUp effect Investment from abroad: Investment from abroad, Education foreign direct investment foreign portfolio investment investment in human capital is at least as important as investment in physical capital opportunity cost "braindrain" Education: Foster economic growth by protecting property rights and promoting political stability Adverse effects if property rights are not protected Political instability Property rights and political stability Free trade Inward oriented policies Outward oriented policies The amount of how much a nation trades is also determined by geography R&D The primary reason why living standards have improved over time has been due to large increase in technological knowledge Knowledge can be considered a public good Research grants and tax incentives Patent systems The productivity slowdown and speedup Many economists believe that changes in productivity have occurred as a result of changes in the amount of technological innovation Population Growth Stretching the natural resources Diluting the capital stock Promoting Technological Progress The importance of the long run growth A country's stand of living depends on it's ability to produce goods and services. ...
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This note was uploaded on 04/23/2008 for the course EC 151 taught by Professor Frascatore during the Fall '08 term at Clarkson University .

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