Economic Growth 08 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc.. Modern Economic Growthdifferences in living standards... Labor and Productivity• Size of emplo
Trang 1Economic Growth
08
McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc All rights reserved.
Trang 2Economic Growth
capita over some time period
Trang 3Economic Growth
• Growth in U.S real GDP 1950-2009
• Growth in U.S real GDP per capita
Trang 4Economic Growth
(1) Year
(2) Real GDP, Billions of 2 2005$
(3) Population, Millions
(4) Real GDP, Per Capita, 2005$
Trang 5Modern Economic Growth
in late 1700s
• Time for leisure
Trang 6Modern Economic Growth
differences in living standards
Trang 7Modern Economic Growth
Real GDP Real GDP Average annual per capita, per capita, growth rate, Country 1960 2007 1960-2007
Figures are in 2005 dollars
Source: Penn World Table version 6.3, pwt.econ.upenn.edu
Trang 8Modern Economic Growth
Trang 9Institutional Structures of Growth
• Efficient financial institutions
Trang 11Determinants of Growth
government must purchase the economy’s expanding output
• Efficiency factor
and full employment
Trang 12Economic Growth
b
Production Possibilities
A C
Trang 13Labor and Productivity
• Size of
employed labor force
• Average
hours of work
Labor Inputs (hours of work)
Real GDP
Real GDP = hours of work x labor productivity
Trang 14U.S Economic Growth
Increase in quantity of labor 1.1 1.3 1.4 -0.1 0.2
Increase in labor productivity 2.5 1.5 2.4 2.7 2.3
Accounting for the Growth of U.S Real GDP, 1953-2007, Plus Projection from
2009-2020
(Average Percentage Changes)
Trang 15Accounting for Growth
allocation (15%)
Trang 16Accounting for Growth
Average Test Scores of Eighth Grade
Students in Math and Science, 2007
Trang 18Productivity Growth
• Microchip/information technology
• New firms and increasing returns
• Sources of increasing returns
• More specialized inputs
• Spreading of development costs
• Simultaneous consumption
• Network effects
• Learning by doing
•
Trang 19Productivity Growth
Trang 20Economic Growth
• Is economic growth desirable and
sustainable?
• The antigrowth view
• Environmental and resource issues
• In defense of economic growth
• Higher standard of living
• Human imagination can solve environmental and resource issues
Trang 21Economic Growth
abundance
• Results in higher standards of living
application of human knowledge
Trang 22Alternative Thoughts on Economic Success
• Is GDP growth an effective measure of
Trang 23Alternative Thoughts on Economic Success
• E F Schumacher – well known economist
that wrote “Small is Beautiful” in 1973
• Energy Crisis underway resulting from the Arab Crude Oil
Embargo
• The world woke up to the fact that hydrocarbons were finite
on planet Earth
• Happiness should not come from
consumption and the reckless use of finite resources, but rather should come from
wanting fewer “things”
Trang 24Alternative Thoughts on Economic Success
• Gross National Happiness
focuses on psychological
well-being, rather than consumption
spirituality and quality of life
Trang 25Global Perspective
Trang 26Economic Growth in China
• Growth averages past 25 years:
• Labor more productive
• More international trade
• Transition to market economy
• Joined WTO 2001
• Financial system remains weak
•