GDP = PIB

Gross Domestic Product (GDP): Represents the total market value of all final goods
and services produced in the country in a year
Produit intérieur brut (PIB) : valeur marchande totale de tous les biens et
services finals produits par l'économie dans le pays en 1 ans

GDP (Gross Domestic Product ) = market value of all finished goods or services
produced by economy.
1 YEAR GDP calculated

Finished goods = goods produced and sold ONCE in this year only and not count in
the future if resold

Exemple : baker buys eggs and sugar = intermediate goods used to produce the
final goods = cake
intermediate goods doesn't count in GDP

Goods that are used to produce other goods are called CAPITAL GOODS
Exemple : Tractor used to produce in farm
Tractor is a finished good also because it was sold and will not count in the
future GDP

GDP only counts for production in the Year and not old things
Exemple : old house sold , doesn't count in GDP
new house built counts in GDP

GDP counts only the goods produced in the same country

Exemple : you live in France and you buy 500$ of American Cheese , 500$ will be
added to the GDP of America and not France because the cheese is exported from
USA .

If a good is not bought or sold , it doesn't count in the GDP

Exemple : doing errands , delivering news paper , charity ..

GDP PER CAPITA = PIB PAR HABITANT

there are 2 types of GDP :

-NOMINAL GDP (includes inflation , different prices of each year)
-Real GDP (constant , value of all goods and services of a specific year on a
specific timeframe)

GDP can increase if we produce best goods and services (more valuable)

Real GDP per capita can be a measure to the standard of living of countries
can be correlated to life expectancy , happiness , etc...

REAL GDP per capita can show some unequal distribution of wealth
example : Nigeria = 4353$ GDP per capita , 80% live with 2$ per day
Pakistan = 4190$ GDP per capita , 60% live with 2$ per day
there a some rich wealthy individuals , a lot of poor people in nigeria and little
rich people because they have a lot

GDP per capita could indicate growth

Cosumption + Investment = GDP

GDP has 2 categories :

national spending approach (consumption, investment , government purchases)
factor income approach (employee compensation , rents ) = GDI

Real GDP per capita = GDP divided by the population

Formula to calculate in how much time the GDP per capita will double :
exemple : 70 divided by 2% (growth per year) = 35 years to double

Deirdre McCloskey coined/invented the term innovationism.

a poor country can grow and diverge from another

Growth miracle (japan ,south korea) , better life (happiness,economy..)
Growth disaster (nigeria) , worse life

Institutions defines the political , economical and social aspects of a country

exemple : North korea growth disaster = totalitarian state , military , famine
South korea growth miracle = capitalism , economy free , industry ,
Different institution creates different incentives = different ideas = different
things and changes in countries

Countries that have access to sea have an advantage for commerce = good economic
growth
countries that are land-locker with no access to sea = slow economic growth

Country become rich with work = production by workers in good conditions using
tools that help them

The world exploded with innovationism after the 18th century. This was the result
of: property rights, non-corrupt courses, rules of law, the rise of access to
education, and reliable energy.

Institutions guide a country’s choices – which paths to follow, which actions to

take, which signals to listen to, and which ones to ignore.

Productivity is made up of physical capital, human capital, technological

knowledge, and entrepreneurs.

Solow Model ( A , e , l , K) = Economic model used to analyze growth

L = Labour
e = Education
L x E = human capital
K = physical capital (factories,tools..)
A = ideas (how to do this,how to cure this.. , knowledge)

Catching up = capital accumulation

Cutting edge = ideas accumulation (lead to +production , investment ..)

ideas grows better when there are good institutions to carry them

Ideas are nonrivalvilous = shared