Chapter 25: Production and Growth
Incomes and Growth Around the World
Poor countries are not poor forever
poor can faster-growing than rich countries
Productivity is important for a country's living
measured by output / labor unit (Y/L).
Y = real GDP = quantity of output produced
L = quantity of labor
↑ machines and equipment per worker (K/L) => ↑ productivity (Y/L).
↑ education and skills per worker (H/L) => ↑ productivity (Y/L).
↑ natural resources per worker (N/L) => ↑ productivity (Y/L)
but countries can be rich without many natural resources.
Technological knowledge improves productivity by finding better ways to produce goods and services.
- Technological knowledge is society's understanding of production
- human capital is individuals' learned skills
- both ↑ productivity.
The Production Function
Y = A*F(L, K, H, N)
2Y = A*F(2L, 2K, 2H, 2N)
F gồm L K H N, cả LKHN tăng 2 thì Y tăng 2
A giữ nguyên
A: the level of technology,
hằng số ko đổi
F: input
Y: output
public policy can affect growth in productivity and living standards ?
Saving and Investment
increasing K, which requires investment.
growth in productivity and living standards
nhưng lợi nhuận giảm dần về vốn
The Production Function
(biểu đồ hàm sản xuất)
Ox: K/L (Capital per worker)
Oy: Y/L (output / labor)
càng lên cao càng giảm dần
The catch-up effect
poor countries tend to grow more rapidly than rich ones
requires both countries to have the same technology
Investment Abroad
foreign direct investment
foreign portfolio investment
Education(H)
invest education in future, but ↓ wage now
Property Rights and Political Stability
(Quyền sở hữu và ổn định chính trị)
⛔corruption
Free Trade
Research and Development
Population Growth