Professional Documents
Culture Documents
Lecture 4 - Production and Growth - Updated
Lecture 4 - Production and Growth - Updated
Lecture 4 - Production and Growth - Updated
Principles of Macroeconomics:
Lecture 4: Production and growth
By
Hanoi, 2023
Today’s Outlines
• Economic growth around the world.
• Productivity: Its role and determinants.
• Case study: Are you richer than the richest
American?
• Economic growth and public policy.
• Discussion: Growth policies Vietnam versus China?
• The importance of long-run growth.
2
Copyright © 2004 South-Western
1
2/11/2023
2
2/11/2023
Copyright©2004 South-Western
3
2/11/2023
4
2/11/2023
10
5
2/11/2023
• Physical Capital
• is a produced factor of production.
• It is an input into the production process that in the past
was an output from the production process.
• is the stock of equipment and structures that are
used to produce goods and services.
• Tools used to build or repair automobiles.
• Tools used to build furniture.
• Office buildings, schools, etc.
11
• Human Capital
• the economist’s term for the knowledge and skills
that workers acquire through education, training,
and experience
• Like physical capital, human capital raises a nation’s
ability to produce goods and services.
12
6
2/11/2023
• Natural Resources
• inputs used in production that are provided by
nature, such as land, rivers, and mineral deposits.
• Renewable resources include trees and forests.
• Nonrenewable resources include petroleum and coal.
• can be important but are not necessary for an
economy to be highly productive in producing
goods and services.
13
• Technological Knowledge
• society’s understanding of the best ways to produce
goods and services.
• Human capital refers to the resources expended
transmitting this understanding to the labor force.
14
7
2/11/2023
15
16
8
2/11/2023
17
18
9
2/11/2023
19
20
10
2/11/2023
21
22
11
2/11/2023
23
24
12
2/11/2023
25
26
13
2/11/2023
27
28
14
2/11/2023
29
12.0
10.0
8.0
6.0
4.0
2.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Vietnam China
Copyright © 2004 South-Western
30
15
2/11/2023
18,000
16,000
14,000
12,556
12,000
10,000
8,000
6,000
3,756
4,000
2,000
-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
31
32
16
2/11/2023
Education
33
Education
34
17
2/11/2023
Education
35
36
18
2/11/2023
Free Trade
37
Free Trade
38
19
2/11/2023
39
Growth Rate
(percent
per year)
4.0
3.5
3.0
2.5
2.0
1.5
1.0
40
20
2/11/2023
Population Growth
41
Population Growth
42
21
2/11/2023
Summary
• Economic prosperity, as measured by real GDP
per person, varies substantially around the
world.
• The average income of the world’s richest
countries is more than ten times that in the
world’s poorest countries.
• The standard of living in an economy depends
on the economy’s ability to produce goods and
services.
Copyright © 2004 South-Western
43
Summary
• Productivity depends on the amounts of
physical capital, human capital, natural
resources, and technological knowledge
available to workers.
• Government policies can influence the
economy’s growth rate in many different ways.
44
22
2/11/2023
Summary
• The accumulation of capital is subject to
diminishing returns.
• Because of diminishing returns, higher saving
leads to a higher growth for a period of time,
but growth will eventually slow down.
• Also because of diminishing returns, the return
to capital is especially high in poor countries.
45
23