Study Guide 1

Asacountryapproachessteadystatethegrowthratewill

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Unformatted text preview: preciation => a decrease in steady state output per person 2. An increase in the rate of investment => an increase in steady state output per person 3. As a country approaches steady state, the growth rate will decrease c. Applications of Capital Accumulation i. Soviet 5yr. plans 1. Heavily focused on rapid accumulation of capital 2. Resulted in high growth rates at first, but absence of other factors eventually led to stagnation. ii. Immigration 1. If one area has a high capital per worker compared to its neighbor, workers will tend to move into the area with high capital per worker and capital will tend to move out of the area with high capital per worker. d. Role of Investment i. Investment can be generated from 1. Private savings 2. Public savings 3. Positive Net International Capital Flows (FDI) ii. FDI 1. Potential Benefits 2. Potential Harms 3. Factors that encourage and discourage FDI iii. Examples of Successful Development: Tigers 1. Economic / Trade Liberalization: to attract FDI 2. High Rates of Domestic Sav...
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This note was uploaded on 12/05/2010 for the course ECON 114 taught by Professor Cindybenelli during the Summer '08 term at UCSB.

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