28 February 2013 Econ 202

Why some countries are rich and some are not

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why some countries are rich and some are not Technology For many 20 th  century economists, these 4 components are the  primary way to stabilize and induce economic growth o Policy implications
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Poor nations need capital and modern technology Capital goods as gifts Aid, especially for capital Exogenous growth: growth comes from outside the economy o 2 key Solow papers in 1956 & 1957 Good news: policy relevant Growth theory impacts human welfare Late 1950s – African independence Bad news: policy relevant If you don’t have the theory right, you can really mess  with people’s lives o Nations often produce below their production function Producing well inside the production possibilities frontier Modern growth theory focuses on the importance of not just resources and  technology, but the existence of certain economic and political institutions o Institution: a significant practice, relationship or organization Ex. Type of government, private property rights (in places where  people can own their own property economic growth tends to be  positive), corruption, legal, etc. 
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