Lecture8 - Lecture 8 An Introduction to Economic Growth and...

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ECON1002 Introductory Macroeconomics 1 Lecture 8: An Introduction to Economic Growth and Production Function Why Study Economic Growth “The consequences for human welfare . .. are simply staggering: Once one starts to think about them, it is hard to think about anything else” ( Robert Lucas, Nobel laureate in economics, 1995 )
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ECON1002 Introductory Macroeconomics 2 Should be able to answer the following questions…. . 1. What has been the world’s growth experience over the last 1000 years? 2. How do we illustrate LR growth in the AD/AS framework? 3. What are the two basic factors that influence a nation’s growth performance? 4. What factors impact on average labour productivity? 5. What are some of the costs of economic growth? 6. What is production function? What is diminishing marginal productivity? What is the assumption of the constant returns to scale? 7. What is the concept of total factor productivity? Expected Learning Outcomes
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ECON1002 Introductory Macroeconomics 3 Historical Experience Economic Growth over the Millennia 0 5 10 15 20 25 30 0 1000 1500 1600 1700 1820 1870 1913 1950 1973 1998 GDP per person (US$'000s, 1990 prices World Western Countries Asia (not Japan) Africa Source: Angus Maddison: The World Economy. A Millennium Perspective (OECD,2001)
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4 Historical Experience Some Striking Facts 1 billion people at the beginning of the 20th century, now more than 6 billion on earth. 1 billion people still living on less than US$2 (in 1985 prices) per day – vast majority in Africa. Not everyone is better off (In fact, a huge increase in population (due to pop growth) living in absolute poverty!) Some countries (East Asian NIEs) experienced ‘growth miracles’ while some others (sub-Saharan African countries) ‘growth disaster’. Growth is probably the best way to get out of the vicious
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This note was uploaded on 08/18/2011 for the course ECON 1002 taught by Professor Markmelatos during the Three '10 term at University of Sydney.

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Lecture8 - Lecture 8 An Introduction to Economic Growth and...

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