Lecture Notes 3

Lecture Notes 3 - 30/03/11 Long-Run Growth: Policies that...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
30/03/11 Long-Run Growth: Policies that will develop a long term growth Output growth: the growth rate of the output of the entire economy Per-capital output growth: the growth rate of output per person in the economy Labor productivity growth: the growth rate of output per worker (the employment force) Growth rates vary significantly across regions: o Developing countries tend to have a higher real GDP growth rates than higher income countries o Low growth rates in low income countries – not an inclusive trend o China’s exponential economic growth originates in 1990s. o As a general rule, developing countries tend to have higher average rates of growth than do high income countries o Resource rich countries behave differently – low population dependent on one o Eventually poor countries should catch-up to poor countries: convergence. The movement of technology across borders. o US and China: GDP Growth: USA 1.3, China 9.8 – if China maintains this growth rate, the gap between the GDP per capita will close significantly in 20 years – the effect of compounding. Note very few countries maintain such a high growth rate. Small growth rates in GDP matter over time, small differences in GDP growth rate matter over time – the compounding effect. o The rule of 70: approximation of how long an amount will take to double o If a variable is growing by X per cent per year o It will double in approximately 70/X years o As the numbers get larger, this approximation becomes less accurate The Growth Process: From Agriculture to Industry o 1750 – England, Industrial Revolution – increased productivity significantly in the agriculture and textiles industries
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/08/2011 for the course ECON 101 taught by Professor Gulati during the Spring '11 term at Columbia.

Page1 / 3

Lecture Notes 3 - 30/03/11 Long-Run Growth: Policies that...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online