Understanding Economic Growth Drivers Study Guide
This guide explains the core concepts of economic growth, focusing on the aggregate production function and the roles of physical capital, human capital, and knowledge. It covers investment, depreciation, the return on capital, and the factors influencing national wealth and living standards.
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The Aggregate Production Function and GDP Growth
Long-Run Economic Growth and Productivity
The aggregate production function describes how total real gross domestic product depends on factor inputs including physical capital, labor, human capital, knowledge, social infrastructure, and natural resources.
- Aggregate production function
- Real gross domestic product
- Physical capital
- Labor hours
- Human capital
- Knowledge
- Social infrastructure
- Natural resources
- Diminishing marginal returns
- Productivity
- Capital stock
- Capital utilization
- Common knowledge
- Proprietary knowledge
- Labor supply
- Labor demand
Long-Run Economic Growth and Productivity
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Capital, Human Capital, and Knowledge
This topic examines international migration, capital stock investment, depreciation, human capital, and knowledge within the aggregate production function.
- International migration
- Barriers to cross-country migration
- Capital in the aggregate production function
- Investment
- National savings
- Private savings
- Government surplus
- Government deficit
- Depreciation
- Change in capital stock
- Return on capital
- Marginal product of capital
- Human capital
- Knowledge in the aggregate production function
- Research and development
- Product development
- Process development
- Nonrival knowledge
- Nonexcludable goods
- Patents
Capital, Human Capital, and Knowledge: Drivers of Economic Growth
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Decomposing GDP and Growth Accounting
This content examines the components of GDP growth including capital, labor hours, technology, social infrastructure, and natural resources within the aggregate production function.
- Social infrastructure
- Property rights
- Natural resources
- Nonrenewable resources
- Renewable resources
- GDP growth rate
- Growth accounting
- Total Factor Productivity
- Capital share
- Labor share
- Short run
- Long run
- Very long run
Globalization, Competitiveness, and Economic Effects
Globalization and Economic Competitiveness
Globalization involves the increasing ability of goods, capital, labor, and information to flow among countries and affects economic competitiveness.
- Globalization
- Competitiveness
- Effects of Globalization
- Competition among firms
- Production costs
- Criticism of Globalization
- Real wages
- Policies to increase competitiveness
Determinants of Economic Growth and Convergence
Economic Growth and Living Standards
This topic examines real GDP per capita, the catch up effect of capital per worker, and how growth rates impact long-run living standards.
- Real GDP per capita
- Catch up Effect
- Capital per worker
- Rule of 70
- Log scale growth paths
- GDP level vs. growth rate
- Economic development
- Material living standards
Determinants of Economic Growth and Convergence
This content examines how capital stock, human capital, and technology determine output growth and the reasons for convergence or divergence between economies.
- One-person Closed Economy
- Capital stock
- Human capital
- Marginal product of capital
- Investment rate
- Physical capital
- Depreciation rate
- Convergence
- Divergence
- Property rights
- Social infrastructure
- Technology adoption
- Long-run GDP growth
- Environmental sustainability
International Institutions and Economic Growth
International institutions like the World Bank, International Monetary Fund, and World Trade Organization play roles in promoting growth, providing loans, and sorting out trade problems.
- World Bank
- International Monetary Fund
- World Trade Organization
- Economic growth
- Balance of payment
- Conditional help
- Infrastructure construction
- Trade problems
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