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Unformatted text preview: * Diminishing marginal product: the extra output produced. . Catch- up effect * catch-up effect: poor countries tend to grow faster than rich countries. Policies: What can government policy do to raise productivity and living standards? 1. Encourage saving (K)- Consume less and save more - eg. Impose a consumption tax 2. Allow foreign investment (K) Policies 3. spend on education (H) * More educated individuals = more idea for society * brain drain problem: emigration of highly educated people to rich countries. 4 Improive…. 5 free trade (A) * can ba asubtiute for technology 66. Resarch and development- R & D ( K,A) *grants *patent system...
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This note was uploaded on 01/27/2011 for the course ECON 1B03 taught by Professor Hannahholmes during the Winter '08 term at McMaster University.
- Winter '08