ECON 20B Chapter Notes -Free Trade, Foreign Portfolio Investment, Physical Capital
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ECON 20B Full Course Notes
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25: production and growth: economic growth around the world real gdp growth rate ignored short term fluctuations, productivity: its role and determinants. Productivity: quantity of goods and services produced from each unit of labor input. Crusoe example of standard of living where his productivity of how much he produced determined his standard of living. Diminish returns: property where the benefit from an extra unit of an input declines as the quantity of the input increases. Benefits from additional capital becomes smaller and smaller overtime long run, higher saving rate leads to higher level of productivity and income but not to higher growth of these variables. Property rights refer to the ability of people to exercise authority over resource they own: free trade inward oriented policies, poor countries should have outward oriented policies (trade, geography (near seaports) better trade, research and development.
