Week6_Productivity

Week6_Productivity - PRODUCTIVITY AND GROWTH PRODUCTION AND...

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PRODUCTIVITY AND GROWTH
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PRODUCTION AND GROWTH Economic development has been an uneven process. There are large differences in income/GDP between countries. Even today, there is a rather large difference between the rich and the poor – unfortunately, this gap has not been closing. Within a country there are large changes in the standard of living over time. Different countries, however, grow at different speeds. A country’s standard of living depends on its ability to produce goods and services. In the United States over the past century, average income as measured by real GDP per person has grown by about 2 percent per year.
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Table 1: The Variety of Growth Experiences
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GROWTH AROUND THE WORLD Living standards, as measured by real GDP per person, vary significantly among nations. The poorest countries have average levels of income that have not been seen in the United States for many decades. Annual growth rates that seem small become large when compounded for many years. Compounding refers to the accumulation of a growth rate over a period of time.
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LABOR PRODUCTIVITY A nation’s standard of living is determined largely by the productivity of its workers. Welfare and performance differences between countries can be explained by
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This note was uploaded on 10/20/2011 for the course ECO 202 taught by Professor Normmiller during the Fall '08 term at Miami University.

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Week6_Productivity - PRODUCTIVITY AND GROWTH PRODUCTION AND...

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