ECO 2117 Lecture Notes - Lecture 5: Endogenous Growth Theory, Investment, Surplus Labour

• School: University of Ottawa
• Department: Economics
• Course: ECO 2117
• Professor: Octavian Strimbu

Document Summary

An economic theory reflects an argument-(cid:271)ased (cid:448)ie(cid:449) of the (cid:858)ho(cid:449) & (cid:449)h(cid:455)(cid:863) of a(cid:374) economic system or a part thereof. Arguments are based on intuition, logic and evidence [theoretical and empirical] Because the real world is too complex, theories focus on main elements and thereby ignore other elements. As our understanding progresses, old theories are revised and new theories are developed. Capital accumulation: investments in physical and human capital. Growth of population and labor force: more workers, larger domestic demand. Technological progress: neutral, labor/capital-saving, labor/capital augmenting. Classical growth theories [in historical order]: development as growth & linear-stages theor(cid:455) [(cid:1005)(cid:1013)(cid:1009)(cid:1004)(cid:859)s-(cid:1005)(cid:1013)(cid:1010)(cid:1004)(cid:859)s, structural-(cid:272)ha(cid:374)ge theories [(cid:1005)(cid:1013)(cid:1011)(cid:1004)(cid:859)s, depe(cid:374)de(cid:374)(cid:272)e theories [(cid:1005)(cid:1013)(cid:1011)(cid:1004)(cid:859)s, neo(cid:272)lassi(cid:272)al (cid:272)ou(cid:374)ter theories [(cid:1005)(cid:1013)(cid:1012)(cid:1004)(cid:859)s, e(cid:374)doge(cid:374)ous gro(cid:449)th theories [(cid:1005)(cid:1013)(cid:1013)(cid:1004)(cid:859)s] Development as growth & linear-stages theories [(cid:1005)(cid:1013)(cid:1009)(cid:1004)(cid:859)s &(cid:1005)(cid:1013)(cid:1010)(cid:1004)(cid:859)s] Knowledge base: marshall plan and historical experience of industrialized nations [agricultural to industrial nations] Industrialized nations experience 5 stages of economic growth [rostow] Traditional society pre-conditions for take-off take-off drive to maturity high mass consumption.