lec_2_110B - Economics110B WorldEconomic HistoryII

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    Economics 110B  World Economic  History II Spring 2009 University of California, Davis Lecture 2: Economic Growth: A Few More  Theories, Some Facts and the Leaders:  Britain and Germany
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    Today’s Program Summary of the “Neo-classical” Growth model Lewis-Fei-Ranis Model of developing country  growth New Growth Theory Convergence or Divergence? Country Examples: Great Britain, Germany, USA,  India, Japan
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    Key Information Instructor: Chris Meissner cmmeissner@ucdavis.edu Office: 1104 SSH Office Hours: Tuesdays 2:15-4:15, Fridays 3:00-4:00PM  or by appointment Course website and information—SMARTSITE Class location and time: Storer 01322, TTH 12:10- 1:30  P.M.  
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    Readings Cameron and Neal Ch. 8, 9, 10 Suggested Readings (posted on Smartsite) Lant Pritchett, “Divergence, Big Time”  Journal of  Economic Perspectives   (Summer 1997) Moses Abramovitz, “Catching Up Forging Ahead,  and Falling Behind,”  Journal of Economic History   46 (1986), pp.385-406
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    What Causes Economic Growth? The  Industrial Revolution  in England and later in other  countries was a product of many possible causes… Conventional Inputs or factors Population growth (Labor) Land and Resources (Land) Capital Accumulation (Capital) But most economic growth and the differences in levels are not  accounted for by changes in conventional inputs but rather  by changes in  Technology—Factor productivity Institutions Policy Human Capital
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    Economic Growth: Basics Y=  f  (K, L, T (land), H (human capital) A) Neo-classical view (Solow) - savings, demography, matter for levels of GDP per capita Long-run growth depends on technology or the effectiveness of ALL inputs or just “A” -In the “long run” the growth rate is constant Before the long run the growth rate may be high.
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    Solving the Neo-Classical Growth Model:  Graphically k y α sk * k k g n ) ( + + δ
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    Lewis-Fei-Ranis Model “Facts” about LDCs Surplus labor in the traditional (farming) sector Growth could occur along a fully elastic labor supply  curve Growth is investment in a “modern” sector. The fact that  wages don’t rise helps keep investment up Assumptions  in modern sector BOTH  sectors Also there is an ORGANIZATIONAL ASYMMETRY L is paid W = MPL in modern sector L is paid W > MPL in traditional sector
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This note was uploaded on 11/08/2010 for the course ECN 110B 110B taught by Professor Wilson during the Winter '10 term at UC Davis.

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lec_2_110B - Economics110B WorldEconomic HistoryII

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