《经济学英文教学课件：KW2_Ch25 Long-Run Economic Growth》由会员分享，可在线阅读，更多相关《经济学英文教学课件：KW2_Ch25 Long-Run Economic Growth（52页珍藏版）》请在金锄头文库上搜索。
1、1 of 52chapter: 252009 Worth PublishersLong-Run Economic Growth2 of 52WHAT YOU WILL LEARN IN THIS CHAPTERHow long-run growth can be measured by the increase in real GDP per capita, how this measure has changed over time, and how it varies across countriesWhy productivity is the key to long-run growt
2、h, and how productivity is driven by physical capital, human capital, and technological progressThe factors that explain why growth rates differ so much among countries3 of 52WHAT YOU WILL LEARN IN THIS CHAPTERHow growth has varied among several important regions of the world and why the convergence
3、 hypothesis applies to economically advanced countriesThe question of sustainability and the challenges to growth posed by scarcity of natural resources and environmental degradation4 of 52Comparing Economies Across Time and SpaceReal GDP per capita (log scale)$100,00010,0001,000 1907 1920 1930 1940
4、 1950 1960 1970 1980 1990 2000 2007 Year5 of 52Real GDP per CapitaYear Percentage of 1907 real GDP per capitaPercentage of 2007 real GDP per capita1907100%16%19271292119471752819672834619874306920076201006 of 52Income Around the World, 20077 of 52PITFALLSChange in levels versus rate of changeWhen st
5、udying economic growth, its vitally important to understand the difference between a change in level and a rate of change. When we say that real GDP “grew,” we mean that the level of real GDP increased.We might say that U.S. real GDP grew during 2007 by $229 billion. If U.S. real GDP in 2006 was $11
6、,295 billion, then U.S. real GDP in 2007 was $11,295 billion + $229 billion = $11,524 billion. We could calculate the rate of change, or the growth rate, of U.S. real GDP during 2007 as: ($11,524 billion $11,295 billion)/$11,295 billion) 100 = ($229 billion/$11,295 billion) 100 = 2.03%. 8 of 52Growt
7、h RatesHow did the United States manage to produce over six times more per person in 2007 than in 1907? A little bit at a time. Long-run economic growth is normally a gradual process, in which real GDP per capita grows at most a few percent per year. From 1907 to 2007, real GDP per capita in the Uni
8、ted States increased an average of 1.8% each year.9 of 52Growth RatesThe Rule of 70 tells us that the time it takes a variable that grows gradually over time to double is approximately 70 divided by that variables annual growth rate.10 of 52Growth RatesUnited States10%86420-2Average annual growth ra
9、te of real GDP per capita, 1980-2007IrelandArgentinaFrance4.1%2.0%1.5%0.8%-1.4%8.7%ChinaIndiaZimbabwe4.1%11 of 52ECONOMICS IN ACTIONIndia Takes OffIndia achieved independence from Great Britain in 1947, becoming the worlds most populous democracya status it has maintained to this day. Despite ambiti
10、ous economic development plans, Indias performance was consistently sluggish. In 1980, Indias real GDP per capita was only about 50% higher than it had been in 1947. Real GDP per capita has grown at an average rate of 4.1% a year, tripling between 1980 and 2007. What went right in India after 1980?
11、Many economists point to policy reforms. For decades after independence, India had a tightly controlled, highly regulated economy. Today, things are very different: a series of reforms opened the economy to international trade and freed up domestic competition. 12 of 52ECONOMICS IN ACTIONThe Luck of
12、 the IrishIn the nineteenth century, Ireland was desperately poor.Even as late as the 1970s, Ireland remained one of the poorest countries in Western Europe, poorer than Latin American countries such as Argentina and Venezuela.But for the last few decades real GDP per capita has grown almost as fast
13、 in Ireland as in China, and all that growth has made Ireland richer than most of Europe: Irish real GDP per capita is now higher than in the United Kingdom, France, and Germany. Why has Ireland, after centuries of poverty, done so well? A very good infrastructure and human capital.13 of 52The Sourc
14、es of Long-Run GrowthLabor productivity, often referred to simply as productivity, is output per worker.Physical capital consists of human-made resources such as buildings and machines.Human capital is the improvement in labor created by the education and knowledge embodied in the workforce.Technolo
15、gy is the technical means for the production of goods and services.14 of 52Accounting for Growth: The Aggregate Production FunctionThe aggregate production function is a hypothetical function that shows how productivity (real GDP per worker) depends on the quantities of physical capital per worker a
16、nd human capital per worker as well as the state of technology.15 of 52Accounting for Growth: The Aggregate Production FunctionA recent example of an aggregate production function applied to real data comes from a comparative study of Chinese and Indian economic growth by the economists Barry Boswor
17、th and Susan Collins of the Brookings Institution. They used the following aggregate production function:16 of 52Accounting for Growth: The Aggregate Production FunctionUsing this function, they tried to explain why China grew faster than India between 1978 and 2004. About half the difference, they
18、found, was due to Chinas higher levels of investment spending, which raised its level of physical capital per worker faster than Indias.The other half was due to faster Chinese technological progress.17 of 52Diminishing Returns to Physical CapitalAn aggregate production function exhibits diminishing
19、 returns to physical capital when, holding the amount of human capital and the state of technology fixed, each successive increase in the amount of physical capital leads to a smaller increase in productivity.18 of 52Diminishing Returns to Physical CapitalPhysical capital per workerReal GDP per work
20、er$0 $0 15,00030,00030,00045,00045,00055,000A Hypothetical Example: How Physical Capital per Worker Affects Productivity, Holding Human Capital and Technology Fixed20 of 52FOR INQUIRING MINDSThe Wal-Mart EffectAfter 20 years of being sluggish, U.S. productivity growth accelerated sharply (grew at a
21、much faster rate) in the late 1990s. What caused that acceleration? Was it the rise of the Internet?According to McKinsey, the major source of productivity improvement after 1995 was a surge in output per worker in retailingstores were selling much more merchandise per worker.Why? Well Wal-Mart has
22、been a pioneer in using modern technology (for example, computers) to improve productivity.A lot of economic growth comes from everyday improvements rather than glamorous new technologies.21 of 52Physical Capital and Productivity$60,00050,00030,0000Real GDP per worker$20,000 50,000 80,000Physical ca
23、pital per worker (2000 dollars)1. The increase in real GDP per worker becomes smaller . . .2. as physical capital per worker risesABC22 of 52PITFALLSIt May Be Diminished But Its Still PositiveDiminishing returns to physical capital is an “other things equal” statement: holding the amount of human ca
24、pital per worker and the technology fixed, each successive increase in the amount of physical capital per worker results in a smaller increase in real GDP per worker.This doesnt mean that real GDP per worker eventually falls as more and more physical capital is added. Its just that the increase in r
25、eal GDP per worker gets smaller and smaller, albeit remaining at or above zero. So an increase in physical capital per worker will never reduce productivity.Due to diminishing returns, at some point increasing the amount of physical capital per worker no longer produces an economic payoff.23 of 52Gr
26、owth AccountingGrowth accounting estimates the contribution of each major factor in the aggregate production function to economic growth.The amount of physical capital per worker grows 3% a year.According to estimates of the aggregate production function, each 1% rise in physical capital per worker,
27、 holding human capital and technology constant, raises output per worker by 13 of 1%, or 0.33%.Total factor productivity is the amount of output that can be achieved with a given amount of factor inputs.24 of 52Technological Progress and Productivity Growth$120,00090,00060,00030,0000Real GDP per wor
28、ker (2000 dollars)$20,000 50,000 80,000 100,000 Physical capital per worker (2000 dollars)Rising total factor productivity shifts curve up25 of 52What about Natural Resources?In contrast to earlier times, in the modern world, natural resources are a much less important determinant of productivity th
29、an human or physical capital for the great majority of countries. For example, some nations with very high real GDP per capita, such as Japan, have very few natural resources. Some resource-rich nations, such as Nigeria (which has sizable oil deposits), are very poor.26 of 52ECONOMICS IN ACTIONThe I
30、nformation Technology ParadoxMany economists were puzzled by the slowdown in the U.S. growth rate of laborproductivitya fall from an average annual growth rate of 3% in the late 1960s to slightly less than 1% in the mid-1980s. This was surprising given that there appeared to be rapid progress in tec
31、hnology. Why didnt information technologyshow large rewards?27 of 52ECONOMICS IN ACTIONThe Information Technology ParadoxMIT economics professor and Nobel laureate Robert Solow, a pioneer in the analysis of economic growth, declared that the information technology revolution could be seen everywhere
32、 except in the economic statistics.Paul David suggested that a new technology doesnt yield its full potential if you use it in old ways.Productivity would take off when people really changed their way of doing business to take advantage of the new technologysuch as, replacing letters and phone calls
33、 with electronic communications. Sure enough, productivity growth accelerated dramatically in the second half of the 199028 of 52Why Growth Rates DifferA number of factors influence differences among countries in their growth rates. These are government policies and institutions that alter:savings a
34、nd investment spending.foreign investment.education.Infrastructure.research and development.political stability.the protection of property rights.29 of 52Why Growth Rates DifferLatin AmericaEast Asia1960200019602000Percentage of population with no schooling 37.90%14.60%52.50%19.80%Percentage of popu
35、lation with high school or above 5.919.54.426.5Human Capital in Latin America and East Asia30 of 52FOR INQUIRING MINDSInventing R&DThomas Edison is best known as the inventor of the light bulb and the phonograph. But his biggest invention was “research and development”!In 1875 Edison created somethi
36、ng new: his Menlo Park, New Jersey, laboratory employed 25 men full-time to generate new products and processes for business. (http:/www.edisonnj.org/menlopark/)In other words, he did not set out to pursue a particular idea and then cash in. He created an organization whose purpose was to create new
37、 ideas year after year.Research and development, or R&D, is spending to create and implement new technologies.31 of 52The Role of Government in Promoting Economic GrowthPolitical stability and protection of property rights are crucial ingredients in long-run economic growth.Even when governments are
38、nt corrupt, excessive government intervention can be a brake on economic growth. If large parts of the economy are supported by government subsidies, protected from imports, or otherwise insulated from competition, productivity tends to suffer because of a lack of incentives.32 of 52The Role of Gove
39、rnment in Promoting Economic Growth33 of 52ECONOMICS IN ACTIONThe Brazilian BreadbasketIn recent years, Brazils economy has made a strong showing, especially in agriculture. This success depends on exploiting a natural resource, the tropical savannah land known as the cerrado. A combination of three
40、 factors changed this land into a useable resource: technological progress due to research and developmentimproved economic policiesaddition of physical capitalBrazil has already overtaken the United States as the worlds largest beef exporter and may not be far behind in soybeans.34 of 52GLOBAL COMP
41、ARISONOld Europe and New Technology35 of 52Success, Disappointment, and FailureReal GDP percapita (log scale)1960 1970 1980 1990 2000 2007 Year$100,00010,0001,00036 of 52Success, Disappointment, and FailureThe world economy contains examples of success and failure in the effort to achieve long-run e
42、conomic growth. East Asian economies have done many things right and achieved very high growth rates. In Latin America, where some important conditions are lacking, growth has generally been disappointing. In Africa, real GDP per capita has declined for several decades, although there are some signs
43、 of progress now. 37 of 52Success, Disappointment, and FailureThe growth rates of economically advanced countries have converged, but not the growth rates of countries across the world. This has led economists to believe that the convergence hypothesis fits the data only when factors that affect gro
44、wth, such as education, infrastructure, and favorable policies and institutions, are held equal across countries.38 of 52ECONOMICS IN ACTIONAre Economies Converging?39 of 52Success, Disappointment, and FailureEast Asias spectacular growth was generated by high savings and investment spending rates,
45、emphasis on education, and adoption of technological advances from other countries.Poor education, political instability, and irresponsible government policies are major factors in the slow growth of Latin America.In sub-Saharan Africa, severe instability, war, and poor infrastructure particularly a
46、ffecting public healthhave resulted in a catastrophic failure of growth. Encouragingly, the economic performance since the mid-1990s has been much better than in preceding years.40 of 52Is World Growth Sustainable?Long-run economic growth is sustainable if it can continue in the face of the limited
47、supply of natural resources and the impact of growth on the environment.Differing views about the impact of limited natural resources on long-run economic growth turn on the answers to three questions:How large are the supplies of key natural resources?How effective will technology be at finding alt
48、ernatives to natural resources?Can long-run economic growth continue in the face of resource scarcity?41 of 52The Real Price of Oil, 1949-2007Real domestic U.S. oil price(2000 dollars, per barrel)1949 1960 1970 1980 1990 2000 2007 Year$60504030201042 of 52U.S. Oil Consumption and Growth over TimeOil
49、 consumption(thousands ofbarrels per day)1949 1960 1970 1980 1990 2000 2007 Year25,00020,00015,00010,0005,000Real GDPper capita(2000 dollars)$40,00030,00020,00010,00043 of 52Economic Growth and the EnvironmentThe limits to growth arising from environmental degradation are more difficult to overcome
50、because overcoming them requires effective government intervention.The emission of greenhouse gases is clearly linked to growth, and limiting them will require some reduction in growth. However, the best available estimates suggest that a large reduction in emissions would require only a modest redu
51、ction in the growth rate.44 of 52Climate Change and GrowthCarbon dioxideemissions(million metric tons)1980 1985 1990 1995 2000 2005 Year7,0006,0005,0004,0003,0002,0001,00045 of 52Economic Growth and the EnvironmentThere is broad consensus that government action to address climate change and greenhou
52、se gases should be in the form of market-based incentives, like a carbon tax or a cap and trade system. It will also require rich and poor countries to come to some agreement on how the cost of emissions reductions will be shared.46 of 52SUMMARY1.Growth is measured as changes in real GDP per capita
53、in order to eliminate the effects of changes in the price level and changes in population size. Levels of real GDP per capita vary greatly around the world: more than half of the worlds population lives in countries that are still poorer than the United States was in 1907. Over the course of the twe
54、ntieth century, real GDP per capita in the United States increased fivefold. 2.Growth rates of real GDP per capita also vary widely. According to the Rule of 70, the number of years it takes for real GDP per capita to double is equal to 70 divided by the annual growth rate of real GDP per capita.47
55、of 52SUMMARY3.The key to long-run economic growth is rising labor productivity, or just productivity, which is output per worker. Increases in productivity arise from increases in physical capital per worker and human capital per worker as well as advances in technology. The aggregate production fun
56、ction shows how real GDP per worker depends on these three factors. Other things equal, there are diminishing returns to physical capital: holding human capital per worker and technology fixed, each successive addition to physical capital per worker yields a smaller increase in productivity than the
57、 one before. Growth accounting, which estimates the contribution of each factor to a countrys economic growth, has shown that rising total factor productivity is key to long-run growth. It is usually interpreted as the effect of technological progress. 48 of 52SUMMARY4.The large differences in count
58、ries growth rates are largely due to differences in their rates of accumulation of physical and human capital as well as differences in technological progress. A prime factor is differences in savings and investment rates. Technological progress is largely a result of research and development, or R&
59、D.5.Government actions that help growth are the building of infrastructure, particularly for public health, the creation and regulation of a well-functioning banking system that channels savings and investment spending, and the financing of both education and R&D. Government actions that retard grow
60、th are political instability, the neglect or violation of property rights, corruption, and excessive government intervention.49 of 52SUMMARY6.The world economy contains examples of success and failure in the effort to achieve long-run economic growth. East Asian economies have done many things right
61、 and achieved very high growth rates. In Latin America, where some important conditions are lacking, growth has generally been disappointing. In Africa, real GDP per capita has declined for several decades, although there are recent signs of progress. The growth rates of economically advanced countr
62、ies have converged, but not the growth rates of countries across the world. This has led economists to believe that the convergence hypothesis fits the data only when factors that affect growth, such as education, infrastructure, and favorable policies and institutions, are held equal across countri
63、es. 50 of 52SUMMARY7.Economists generally believe that environmental degradation poses a greater problem for whether long-run economic growth is sustainable than natural resource scarcity. Addressing environmental degradation requires effective governmental intervention, but the problem of natural r
64、esource scarcity is often well handled by the market price response.8.The emission of greenhouse gases is clearly linked to growth, and limiting them will require some reduction in growth. However, the best available estimates suggest that a large reduction in emissions would require only a modest r
65、eduction in the growth rate.51 of 52SUMMARY9.There is broad consensus that government action to address climate change and greenhouse gases should be in the form of market-based incentives, like a carbon tax or a cap and trade system. It will also require rich and poor countries to come to some agreement on.52 of 52The End of Chapter 25coming attraction:Chapter 26: Savings, Investment Spending, and the Financial System
