Chapter_10.docx

Chapter_10.docx - Ch. 10 Long-Run Economic Growth: Sources...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Ch. 10 Long-Run Economic Growth: Sources and Policies Economic Growth from 1,000,000 B.C. to the Present Neolithic Revolution —the transition that signifies a change from a hunter-gatherer lifestyle to an agrarian lifestyle. o Allowed for the specialization of skills. Industrial Revolution -- the time period, beginning in England around 1850, where the application of mechanical power to the production of goods led the world to experience significant economic growth. o The Industrial Revolution made possible the sustained increases in real GDP per capita that have allowed some countries to attain a high standard of living. Small Differences in Growth Rates Are Important? Growth rates matter because an economy that grows too slowly fails to raise living standards. In the long run, small differences in economic growth rates result in big differences in living standards .
Background image of page 1

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

View Full DocumentRight Arrow Icon
Why Do Growth Rates Matter? Growth rates matter because an economy that grows too slowly fails to raise living standards. In some countries in Africa and Asia, very little economic growth has occurred in the past 50 years, resulting in severe poverty. o In the poorest countries, more than 100 out of every 1,000 babies die before the age of one “The Rich Get Richer and …” The world can be divided into two groups: the high-income countries (or the industrial countries) and the poorer countries (or developing countries). The high-income countries include the countries of Western Europe, Australia, Canada, Japan, New Zealand, and the United States. The developing countries include most of the countries of Africa, Asia, and Latin America. In the 1980s and 1990s, a small group of countries, mostly East Asian countries such as Singapore, South Korea, and Taiwan, experienced high growth rates and are referred to as the newly industrializing countries. There is a big gap between rich and poor countries. o Top 10% of rich countries are 30 times as rich as the poorest 10%. What Determines How Fast Economies Grow? Economists need to develop an economic growth model in order to explain changes in economic growth rates over time within countries and differences in growth rate among countries. The economic growth model is a model that explains changes in real GDP per capita in the long run. This model focuses on the causes of long-run increases in labor productivity , the quantity of goods and services that can be produced by one worker or by one hour of work. o Economists believe that two key factors determine labor productivity: the quantity of capital per hour worked and the level of technology.
Background image of page 2
Technological change is a change in the quantity of output a firm can produce using a given quantity of inputs. There are three main sources of technological change:
Background image of page 3

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

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/25/2010 for the course ECON 2010 taught by Professor Roussel during the Spring '08 term at LSU.

Page1 / 10

Chapter_10.docx - Ch. 10 Long-Run Economic Growth: Sources...

This preview shows document pages 1 - 4. Sign up to view the full document.

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