Mod 39_ Growth Policy and Why Economic Growth Rates Differ.docx - Justin Sousa 1 Mod 39 Growth Policy and Why Economic Growth Rates Differ Capital

Mod 39_ Growth Policy and Why Economic Growth Rates Differ.docx

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Justin Sousa 1December 15, 2016Mod 39: Growth Policy and Why Economic Growth Rates DifferCapital, Technology, and Growth Differences-Adding to Physical Capital is done by increasing the amount of investment spending in machinery and factories (Japan during the 1960s; China today)-Investment spending must be paid for either out of savings from domestic households or by an inflow of foreign capital--that is, savings from foreign households-The determinant for how much money can be pumped into investment spending depends on their domestic savings-Human capital grows as the education available to citizens grows; more education means more people skilled enough to join the labor force-Scientific knowledge has pushed the growth and development of technology-This includes large investments into research and development to create and implement new technologies-The government does fund for some R&D conducted, but most of the funding comes from private sectorsThe Role of Government in Promoting Economic Growth-Governments and Physical Capital: -The government plays a huge role in building infrastructure, such as roads, power lines, information networks, and other physical capital that sets the foundation for economic activity-Governments must maintain a reliable financial system that will save money properly and allocate it towards smart investment spending accordingly-Governments and Human Capital:-For human capital to increase, the government must invest in primary and secondary education opportunities for citizens-Governments and Technology:-Though much of the research and development in an economy is done by private

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