Brief Summary - Canada's economic system is a global market...

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Canada's economic system is a global market economy (production+sales+distribution of good and services (G+S) - Global market sets prices for G+S Competitiveness is a measure of these factors: price, quality, delivery and after-sale services. - Firms compete on these factors. (Pg. 3) Global competitiveness: In past, international trade was restricted due to inefficiency of large and bulky manufacturing of G+S and firms competed only domestically. Now, due to advance in technologies (microelectronics) and materials ( plastics), G+S can be more easily transported to all over. Thus, international trade increases. Firms must now compete in terms of exports and imports and must defend their domestic markets. Goals of Competitiveness: - to achieve and create wealth t fund social services and increase standard of living. How? By increasing productivity capacity through innovation, superior technology, continuous skill-enhancing training, concern about social equity and preserve environments. (Pg. 4) - emphasizes important of technological process to economic growth. Economic Growth and Competitiveness - Wealth of nation is linked to long-run growth rate of their economics. (Pg.5) Economic growth = savings + capital investment Neoclassical Model (Robert Solow + Trevor Swan) - Output grows in response to increases in inputs of capital and labour as well as the efficiency with which these inputs are used. - Model assumes: competitive economy obeys law of diminishing returns. (Each addition unit of capital will generate a smaller yield than the one before it.) Two Important points: (i) as economy increases, growth will slow down and then stopped. Without continuous technological progress, diminishing marginal productivity of capital will choke off economic growth.
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(ii) economic convergence- if poorer countries have access to technologies, they can catch up to richer countries by saving and invest more until they reach same standard of living. - some cannot achieve convergence because of lack of saving and investments, lack access to technologies, excessive growth of population relative to active labour force (i.e high employment) (Pg.6) New Growth Theory or endogenous growth (Robert Lucas + Paul Romer) (Knowledge-based investment) - emphasize important of human capital, learning by doing, and technological spillover effects in generating economic growth. - Knowledge-based investment: each additional dollar of capital invested in knowledge creation yields more than a previous dollar invested. (Pg. @ - Implications of endogenous growth theory: (i) possibility economic growth can be accelerate by supply-side policies designed to increase all forms of capital. (ii) gap between rich and poor countries could grow even larger over time. According to Joseph Schumpeter
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This document was uploaded on 10/25/2011 for the course LAPS adms1010 at York University.

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Brief Summary - Canada's economic system is a global market...

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