8: Economic Growth
- Page ID
- 312736
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\(\newcommand{\avec}{\mathbf a}\) \(\newcommand{\bvec}{\mathbf b}\) \(\newcommand{\cvec}{\mathbf c}\) \(\newcommand{\dvec}{\mathbf d}\) \(\newcommand{\dtil}{\widetilde{\mathbf d}}\) \(\newcommand{\evec}{\mathbf e}\) \(\newcommand{\fvec}{\mathbf f}\) \(\newcommand{\nvec}{\mathbf n}\) \(\newcommand{\pvec}{\mathbf p}\) \(\newcommand{\qvec}{\mathbf q}\) \(\newcommand{\svec}{\mathbf s}\) \(\newcommand{\tvec}{\mathbf t}\) \(\newcommand{\uvec}{\mathbf u}\) \(\newcommand{\vvec}{\mathbf v}\) \(\newcommand{\wvec}{\mathbf w}\) \(\newcommand{\xvec}{\mathbf x}\) \(\newcommand{\yvec}{\mathbf y}\) \(\newcommand{\zvec}{\mathbf z}\) \(\newcommand{\rvec}{\mathbf r}\) \(\newcommand{\mvec}{\mathbf m}\) \(\newcommand{\zerovec}{\mathbf 0}\) \(\newcommand{\onevec}{\mathbf 1}\) \(\newcommand{\real}{\mathbb R}\) \(\newcommand{\twovec}[2]{\left[\begin{array}{r}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\ctwovec}[2]{\left[\begin{array}{c}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\threevec}[3]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\cthreevec}[3]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\fourvec}[4]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\cfourvec}[4]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\fivevec}[5]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\cfivevec}[5]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\mattwo}[4]{\left[\begin{array}{rr}#1 \amp #2 \\ #3 \amp #4 \\ \end{array}\right]}\) \(\newcommand{\laspan}[1]{\text{Span}\{#1\}}\) \(\newcommand{\bcal}{\cal B}\) \(\newcommand{\ccal}{\cal C}\) \(\newcommand{\scal}{\cal S}\) \(\newcommand{\wcal}{\cal W}\) \(\newcommand{\ecal}{\cal E}\) \(\newcommand{\coords}[2]{\left\{#1\right\}_{#2}}\) \(\newcommand{\gray}[1]{\color{gray}{#1}}\) \(\newcommand{\lgray}[1]{\color{lightgray}{#1}}\) \(\newcommand{\rank}{\operatorname{rank}}\) \(\newcommand{\row}{\text{Row}}\) \(\newcommand{\col}{\text{Col}}\) \(\renewcommand{\row}{\text{Row}}\) \(\newcommand{\nul}{\text{Nul}}\) \(\newcommand{\var}{\text{Var}}\) \(\newcommand{\corr}{\text{corr}}\) \(\newcommand{\len}[1]{\left|#1\right|}\) \(\newcommand{\bbar}{\overline{\bvec}}\) \(\newcommand{\bhat}{\widehat{\bvec}}\) \(\newcommand{\bperp}{\bvec^\perp}\) \(\newcommand{\xhat}{\widehat{\xvec}}\) \(\newcommand{\vhat}{\widehat{\vvec}}\) \(\newcommand{\uhat}{\widehat{\uvec}}\) \(\newcommand{\what}{\widehat{\wvec}}\) \(\newcommand{\Sighat}{\widehat{\Sigma}}\) \(\newcommand{\lt}{<}\) \(\newcommand{\gt}{>}\) \(\newcommand{\amp}{&}\) \(\definecolor{fillinmathshade}{gray}{0.9}\)- 8.1: Introduction to Economic Growth
- This page examines the rise in average daily calorie consumption linked to economic growth, noting significant wage and living standard improvements from the 1600s to today, particularly in Western Europe and North America. It raises important questions about economic growth sustainability, the prospect of middle-income countries catching up, and global poverty challenges.
- 8.2: The Relatively Recent Arrival of Economic Growth
- This page examines global economic growth over the past two centuries, emphasizing the role of the Industrial Revolution and institutional changes. It notes disparities in progress among nations and underscores the importance of key institutions and the rule of law in enhancing economic growth and living standards.
- 8.3: Labor Productivity and Economic Growth
- This page examines labor productivity's crucial influence on economic growth, identifying human capital, technological advancements, and economies of scale as key determinants. It introduces the aggregate production function to analyze growth sources and reviews U.S. productivity trends.
- 8.4: Components of Economic Growth
- This page highlights the critical factors of economic growth, such as physical capital, human capital, and technology. It emphasizes capital deepening through education and skills investment, showing how even minor growth rate differences significantly affect living standards.
- 8.5: Economic Convergence
- This page examines economic convergence, suggesting low- and middle-income countries may experience faster GDP growth than high-income nations. It introduces the "fast" and "slow growth clubs," discussing factors influencing growth like capital investment returns and technological advancements. While arguing for potential convergence, it acknowledges that sustained growth requires ongoing technological innovation.
- 8.6: Key Terms
- This page covers essential concepts in economic growth and production, including the aggregate production function, capital deepening, and labor productivity's impact on GDP. It explores the roles of human capital, technology, and physical capital, with historical references to the Industrial Revolution and modern economic growth. Legal frameworks, such as contractual rights and the rule of law, are emphasized, along with the benefits of special economic zones (SEZ).
- 8.7: Key Concepts and Summary
- This page covers the history and current state of economic growth, noting significant advancements since the early 19th century, particularly in Western economies. It identifies labor productivity as crucial for long-term growth and highlights a productivity slowdown in the U.S. during the late 20th century.
- 8.8: Self-Check Questions
- This page covers essential concepts of economic growth and productivity, including the definition and origins of the Industrial Revolution, the importance of property and contractual rights, and methods for measuring productivity. It analyzes growth rates in South Korea and the U.S. across two decades, discusses government policies that can spur economic growth, and addresses the effects of rapid growth on low-income countries.
- 8.9: Review Questions
- This page covers concepts of economic growth, focusing on the Industrial Revolution's effect on U.S. income levels, growth rate variations between nations, and calculations of GDP per capita and labor productivity. It highlights how labor productivity enhancements boost GDP per capita, introduces the aggregate production function, and defines capital deepening and technological progress.
- 8.10: Critical Thinking Questions
- This page examines economic growth and productivity, noting that some countries surpass the U.S. in GDP growth and raising concerns about stagnation. It addresses the connection between labor productivity and wages, highlighting cases where higher productivity does not equate to wage increases. Education, particularly for girls, is emphasized as crucial for development.
- 8.11: Problems
- This page examines economic growth through GDP per capita and worker productivity in various countries. It outlines future GDP per capita calculations based on initial values and growth rates, illustrating their long-term effects. The page also compares productivity levels among Canada, the UK, the U.S., and Mexico, emphasizing how different growth rates influence relative productivity over time.