Economic growth is influenced by various factors, including:

• Capital (physical and human): The accumulation of machinery, equipment, infrastructure,

and education and training of the workforce
• Technological progress: Advances in technology drive innovation, enhance productivity,
and create new products and services
• Macroeconomic stability: Sound monetary and fiscal policies, low inflation, stable exchange
rates, and prudent regulation create an
environment conducive to investment, consumption, and long-term growth
• Institutions: Strong legal and regulatory frameworks, property rights protection, efficient
governance, and the rule of law foster economic
activity, encourage entrepreneurship, and attract investment
• Trade openness: Access to international markets, trade liberalization, and participation in
global value chains facilitate specialization,
efficiency gains, and higher productivity, driving economic growth
• Demographic factors: Population growth, age structure, labor force participation rates, and
skill levels influence economic growth dynamics
by affecting the size and productivity of the workforce

What allows each of these determinants?

• Capital (physical and human): bigger capacity to produce
• Technological progress: new fields of growth + bigger capacity to produce
• Macroeconomic stability: better context
• Institutions: better context
• Trade openness: new fields of growth + bigger capacity to produce
• Demographic factors: bigger capacity to produce + bigger needs
Physical & human capital
Robert Solow:
1. Developed the Solow Growth Model, which demonstrated the role of technological
progress in driving long-term economic growth.
2. Showed that in the long run, economic growth is primarily determined by technological
innovation rather than capital accumulation
or labor inputs alone.
3. Received the Nobel Prize in Economics in 1987 for his contributions to our understanding
of the sources of economic growth.

Gary Becker:
1. Introduced the concept of human capital, highlighting the importance of education,
training, and health in driving economic growth.
2. Developed the theory of human capital accumulation, emphasizing that investment in
education and skills enhances labor
productivity and contributes to long-term economic growth.
3. Applied economic analysis to a wide range of social phenomena, including family
dynamics, crime, discrimination, and fertility,
demonstrating how economic principles can illuminate various aspects of human behavior
and social outcomes.

Theodore Schultz:
1. Introduced the concept of human capital, emphasizing that investments in education,
training, and healthcare are essential for
economic growth.
2. Conducted empirical research demonstrating the positive correlation between human
capital accumulation and labor productivity,
showing that educated and skilled workers contribute more to economic output.
3. Highlighted the role of human capital in fostering technological innovation, adaptation to
technological change, and overall
economic development.
How can we improve the global context to ensure growth?
Multilateral Cooperation: Foster multilateral cooperation with vassal countries
• Foster collaboration on initiatives related to trade facilitation, infrastructure development,
investment
promotion, and technology transfer
• Strengthen global governance mechanisms and coordinate policy responses to shared
challenges such
as climate change, pandemics, and financial stability

Investment Promotion: Foster foreign direct investment (FDI) by creating a globally attractive
investment climate characterized by political stability, regulatory transparency, and legal
protection for investors
• Implement policies to streamline investment procedures, reduce bureaucratic barriers, and
provide
incentives for investment in key sectors such as infrastructure, technology, and
manufacturing
• Foster partnerships with multinational corporations and the development of international
financial
institutions to mobilize investment capital and expertise

Financial Stability: Maintain financial stability and resilience in the global financial system to
support economic growth
• Strengthen regulatory frameworks and supervisory mechanisms to prevent systemic risks
and financial
crises
• Enhance international cooperation on financial regulation, supervision, and crisis
management to
ensure the stability of cross-border financial flows and institutions
• Promote transparency and accountability in financial markets to build investor confidence
and reduce
volatility

Technology Transfer and Innovation: Facilitate technology transfer and innovation diffusion
across borders to harness the benefits of technological advancements
• Promote collaboration between public and private sectors, research institutions, and
universities to
support research and development (R&D) activities and technology commercialization
• Encourage the adoption of best practices, standards, and intellectual property rights
protections to
incentivize innovation and knowledge sharing

Infrastructure Connectivity: Invest in infrastructure connectivity projects to improve physical

connectivity and reduce transportation costs between countries
• Support regional integration initiatives such as cross-border transportation networks,
energy pipelines,
and digital connectivity platforms
• Enhance trade facilitation measures such as customs harmonization, border infrastructure
upgrades,
and digital trade facilitation to streamline cross-border trade flows and enhance
competitiveness

Open and Rules-Based Trade: Advocate for open trade policies and support the rules-based
international trading system
• Encourage the reduction of trade barriers, tariffs, and non-tariff barriers to promote the free
flow of
goods and services across borders
• Participate in trade negotiations to secure favorable trade agreements that enhance market
access and
facilitate economic integration

What’s the role of WTO?

• Trade Liberalization: facilitate negotiations among member
countries to reduce trade barriers such as tariffs and quotas,
promoting free and fair trade
• Dispute Resolution: provide a forum for resolving trade disputes
between member countries through its dispute settlement
mechanism
• Promotion of Development: The WTO recognizes the importance
of development in fostering global economic growth and aims to
ensure that developing countries can participate effectively in the
multilateral trading syste
• Most-Favored-Nation principle and National Treatment principle: countries cannot
discriminate between their trading partners, granting the same favorable trade terms
to all WTO members
• WTO emphasizes transparency and predictability in trade relations among its
members: providing timely and accessible information about trade policies,
regulations, and practices, as well as establishing mechanisms for resolving trade
disputes through the WTO's dispute settlement system, ensuring a more stable and
predictable trading environment

Why does a company choose to locate their activities in a specific

country?
How can we improve the capacity to produce?
• Incentivize industrial investment:
• provide incentives for investment in key sectors, such as tax breaks, subsidies, or grants
• finance infrastructure development
• Train the workforce: train a skilled workforce that meets the needs of industrial sectors
• Shape your industrial production tool:
• establish special economic zones or industrial parks with streamlined regulations and
infrastructure support to attract
manufacturing companies
• implement trade policies that protect domestic industries while promoting exports, fostering
a competitive environment
• Foster innovation:
• encourage collaboration between government, industry, and academia to support research
and development initiatives
• support access to finance for SMEs to encourage entrepreneurship and industrial
diversification
• foster innovation ecosystems by supporting startups, incubators, and accelerators to drive
technological
advancements in industrial sectors

How can we stimulate demand?

• Build consumer confidence: assure the public about the stability and prospects of the
economy
• Adjust your monetary policy to your objective:
• central banks can lower interest rates to encourage borrowing and investment by both
consumers and businesses
• fight inflation by raising interest rates to stimulate short-term demand
• use exchange rates to make exports more competitive and stimulate demand for
domestically-produced goods and
services in international markets
• Support the spending capacity of economic stakeholders:
• direct government spending on infrastructure projects, such as roads, bridges, schools, and
hospitals, not only creates
jobs but also stimulates demand for goods and services from various sectors of the economy
• social welfare programs, such as unemployment benefits, food assistance, and housing
assistance, can help support
consumer spending during economic downturns
• Broaden your playcourt: expanding access to foreign markets through trade agreements
and reducing trade barriers can
boost demand for domestically produced goods and services
Demand