ECON 201 Lecture Notes - Lecture 11: Physical Capital, Diminishing Returns, Production Function
Document Summary
Econ 201 lecture 11 economic growth pt. Why a production function: tells us productivity, given the inputs, tells us that growth comes from changes in these inputs, tells us the importance of investment. Natural resources don"t matter as much now as they did in earlier times. Human or physical capital is a much more important determinant of productivity. Japan has very high real gdp per capita, but very few natural resources. Nigera is poor but has a lot of resources. What determines growth: physical capital, human capital, technology, but also institutions. With productivity growth, the curve shifts upward. New growth theory : technological progress depends on the ability of innovators to establish monopolies, gives creators a head start over imitators and incentives for them to spend money on the development of new technology. Why growth rates differ: government policies and institutions alter:
