ECON 250D1 Lecture Notes - Lecture 4: Physical Capital, Human Capital, Natural Resource
15 Dec 2019
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Document Summary
But can"t be the only factor since there are so many counter-examples. Switzerland, luxembourg, hong kong devoid of key natural resources yet very wealthy whereas russia, with plenty of resources is struggling economically. A number of studies have begun to unravel the mystery of economic growth. Of these: political stability: when you feel safe, you want to invest more. What if there"s a war infrastructure gets destroyed etc. Incentives perspective: secure private property rights: if government can change a law for example and take away your land for example. Apartment renovation example: legal systems based on the rule of law: how much ownership the government has. These institutions encourage people to make long-term investments in improving land and in all forms of physical capital and human capital. Physical capital nonhuman productive capacity machinery any type of equipment. Human capital, that labor has way more skills than any regular labor.
