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Unformatted text preview: Narrated Powerpoint Notes Presentation 1 Explaining Economic Development • Sources of Productivity Growth • “Institutions matter.” Sources of Productivity Growth (p. 16) • Technology • Specialization & division of labor • Realization of economies of scale • Investments in human capital • Managerial & organizational improvements Technology • Technology change: “changes in knowledge that raise ouput or lower costs.” (p. 16) o More ouput from a given set of inputs. o Invention v. Innovation o Paul David;s (1989) research on electricity Specialization & Division of Labor • Dividing production process into separate tasks • Assigning each specific task(s) according to the worker’s skills and abilities. Realization of Economies of Scale • Returns to scale 1. Economies of scale 2. Diseconomies of scale 3. Constant returns to scale • Two ways of defining economies of scale: 1. ↑ all inputs by X% ↑ output by greater than X% 2. Long-run average cost ↓ as ouput ↑ NOTE: LRAC is sometimes refereed to as “per-unit cost.” RECALL: that most firms have U-chaped average cost curves: AC($) LR AC Curve Output (q) q1 Investments in Human Capital • Human capital: the skills and abilities of the labor force o Education & training o Nutrition & healthcare Managerial & Organizational Improvements • Accounting practices • Inventory control methods • Performance-based promotion & pay structures “Institutions matter.” (Douglass North) • Institutions: the “rules of the game” (p. 16-17) • Institutions provide incentives that affect choices, and thus they can drive (or limit) economic growth and development. • Some institutions that encourage development: o Stable & limited government o Relatively peaceful domestic & international relations o Secure money & banking system o Laws that establish & protect private property rights o Market-oriented economy Presentation 2 Agrarian Protest Movement (continued) • Farmers’ organizations (p. 272-275)Farmers’ organizations (p....
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This note was uploaded on 09/21/2011 for the course ECON 2200 taught by Professor Moore during the Spring '07 term at UGA.
- Spring '07