Chapter 25 - Economic growth. On completion of this chapter students will know how to: List two ways that economic growth is measured; define "modern economic growth" and explain the institutional structures needed for an economy to experience it; identify the general supply, demand, and efficiency forces that give rise to economic growth; describe "growth accounting" and the specific factors accounting for economic growth in the United States. | Economic Growth Chapter 25 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Objectives Modern economic growth and increasing living standards Growth accounting . productivity growth Is growth desirable and sustainable? 25- Economic Growth Increase in real GDP or real GDP per capita over some time period Percentage rate of growth Growth as a goal Arithmetic of growth: Rule of 70 Approximate number of years required to double real GDP = 70 annual percentage rate of growth 25- Economic Growth Growth . real GDP 1950-2005 Increased 6 fold per year Growth in . real GDP per capita Increased more than 3 fold per year Qualifications Improved products and services Added leisure Other impacts 25- Modern Economic Growth Began with the Industrial Revolution in late 1700’s Ongoing increases in living standards Time for leisure Social change Democracy Human lifespan doubled 25- Modern Economic Growth Began in Britain Has spread slowly Starting date main cause of worldwide differences in living standards Catching up is possible Leader countries invent technology Follower countries adopt technology Can grow faster 25- Real GDP Per Capita Real GDP Real GDP Average annual per capita, per capita, growth rate, Country 1960 2004 1960-2004 United States $12,892 $36,098 United Kingdom 10,323 26,762 France 8,531 26,168 Ireland 5,294 28,957 Japan 4,509 24,661 Singapore 4,219 29,404 Hong Kong 3,322 29,642 South Korea 1,458 18,424 Figures are in 1996 dollars Source: Penn World Table 25- Modern Economic Growth Growth-promoting institutional structures Strong property rights Patents and copyrights Efficient financial institutions Literacy and widespread education Free trade Competitive market system 25- Ingredients of Growth Supply factors Increases in quantity and quality of natural resources Increases in quality and quantity of human resources Increases in the . | Economic Growth Chapter 25 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Objectives Modern economic growth and increasing living standards Growth accounting . productivity growth Is growth desirable and sustainable? 25- Economic Growth Increase in real GDP or real GDP per capita over some time period Percentage rate of growth Growth as a goal Arithmetic of growth: Rule of 70 Approximate number of years required to double real GDP = 70 annual percentage rate of growth 25- Economic Growth Growth . real GDP 1950-2005 Increased 6 fold per year Growth in . real GDP per capita Increased more than 3 fold per year Qualifications Improved products and services Added leisure Other impacts 25- Modern Economic Growth Began with the Industrial Revolution in late 1700’s Ongoing increases in living standards Time for leisure Social change Democracy Human lifespan doubled 25- Modern Economic Growth Began in .
