SO NOW WE WILL LOOK AT THE WAYS PUBLIC POLICY CAN EFFECT ECONOMIC GROWTH IN

PRODUCTIVITY AND LIVING STANDARD

SAVING AND INVESTMENT: It says that the capital can only be acquired by saving and
investment.
-When the government creates polices which encourages savings and encourages
investment it is encouraging economic growth.
-investment encouraging economic growth because increasing in capital requires
investment which
comes from saving.
-savings means delay in consumption, to consume more in the future, people choose to
consume later ( when you save, you are saving the part of your financial resources.)
-government influence the amount of savings and investment through savings rate and
interest rate.
INFRASTRUCTURE: (some economies argue that improvements in infrastructure could lead to
higher productivity and some says that the higher productivity will lead to greater infrastructure).

RESEARCH AND DEVELOPMENT: it promotes innovations.

Patent laws (copyrights, license, legal protection or a registered trademark)

THE PROTECTION OF PROPERTY RIGHTS IMPACTS ECONOMIC GROWTH- It is give

owners the legal right to keep or sell their properties(land, labor or capital). Without it the
incentive to invest will be hindered and political instability, corruption and lower economic growth
will be likely.
-by protecting property rights it promotes political stability.
-when government fails to protect the property it can result to political stability because of
uncertainty.
For example: may lupa ka, tas gusto ng kapitbahay mo ng kunin yung portion ng lupa mo.

FREE TRADE:
-when the government adopts outward oriented policies known as free trade
- (inward-oriented policies) limits the investment from abroad. It is aim to raise living
standards by avoiding interaction with other countries.
-(outward-oriented policies) elimination of restriction on trade and foreign investment. Its
promotes integration with the world economy or if the two nations or individuals with different
resources endowments and production capabilities specialize in producing a smaller numbers of
goods and services and engage in trade, both parties will benefit. Total output will rise.

EDUCATION: is an investment in human capital/labor it has the negative and positive effect
-the positive effect is it can stimulate economic growth
- and the negative effect is that the departure of educated or professional people from one
country, economic sector, or field for another usually for better pay or living conditions(brain
drain).

For example: here in the Philippines the college student graduated can be expected to earn
almost twice as much per year as a high school graduate.