Growth 2018

Production and Growth
PowerPoint Slides prepared by:

Andreea CHIRITESCU
Eastern Illinois University
© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as 1
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Wealth Matters
• GDP review
– Basic measure of a nation’s income
– Value of all final goods and services
produced in a country
– Per capita GDP is a basic measure of
living standards
• Economic growth
– The growth rate of per capita GDP
Human Welfare in Nations,
Poor vs. Rich
Making
the Is Income All That Matters?
Connection
Some economists argue that if we look
beyond income to other measures of
the standard of living, we can see that
even the poorest countries have made
significant progress in recent decades.
Over time, increases in income within
a particular country typically have very
little effect on the country’s standard of
living in terms of health, education,
individual rights, political stability, and
similar factors. In sub-Saharan Africa and other parts of
There are limits, of course, to how the world, increases in technology and
knowledge are leading to improvements
much living standards can increase in health care and the standard of living.
if incomes stagnate. Ultimately, much
higher rates of economic growth will be necessary for low-income countries to
significantly close the gap in living standards with high-income countries.
MyEconLab Your Turn: Test your understanding by doing related problems 1.7 and 1.8 at the end of this chapter.
© 2013 Pearson Education, Inc. Publishing as Prentice Hall 4 of 47

Historical Growth
• Economic historian Angus Maddison
estimated GDP levels for many nations
back to the year AD 1.
• Notes:
– For most of human history, the average
person’s life was one of subsistence living.
– There were global variations noticeable
around 1700, but everyone was still very poor.
– Industrial Revolution: rapid technological
progress outpaced population growth
World Per Capita GDP
―The Hockey Stick‖
Figure 22.1
Average Annual
Growth Rates for the
World Economy
World economic
growth was essentially
zero in the years
before 1300,
and it was very slow—
an average of only 0.2
percent per year—
before 1800.
The Industrial
Revolution made
possible the sustained
increases in real GDP
per capita that have
allowed some
countries to attain high
standards of living.

Some Got Rich,
Others Stayed Poor
• On average, we are all wealthier than earlier
centuries.
• However, wealth is not distributed evenly.
– United States, year 1800
• Average income is $2,000 (in 2010 dollars)
– Liberia, year 2012
• Average income is $1,200 (in 2010 dollars)
Per Capita Real GDP
over 200 Years
複利計算 (compounding)
• 成長率:
𝑌2 − 𝑌1
𝑔2 = × 100%
𝑌1
• 由於複利計算，成長率的小差異，在長期可
能會造成所得水準的大差別。
• 若1900年所得為Y，每年成長率 2.3%，至
2000年所得為
Y 1 + 0.023 100 = 9.72 Y
• 若每年成長率為1.3%，則為
Y 1 + 0.013 100 = 3.64 Y
Mathematics of Growth
• Wealth of U.S. didn’t happen overnight;
growth rates grew each year a little bit.
• Break out of poverty began in the
nineteenth century.
Years Growth Rate
0–1800 0.02%
1800–1900 0.64%
1900–1950 1.04%
1950–2000 2.12%
Mathematics of Growth
• Economic growth
– The most important growth rate we consider
– Change in average person’s income,
adjusting for price changes
Economic Growth 
%Nominal GDP  %Prices  %Population
 %per capita Real GDP
數學公式推導
Δ𝑍 Δ𝑋 Δ𝑌
• If 𝑍 = 𝑋 𝛼 𝑌𝛽 , then = 𝛼 + 𝛽 .
𝑍 𝑋 𝑌
Proof:
𝛼 𝛽 𝛼 𝛽
𝑍𝑡+1 𝑋𝑡+1 𝑌𝑡+1 𝑋𝑡+1 𝑌𝑡+1
= 𝛽
=
𝑍𝑡 𝛼
𝑋𝑡 𝑌𝑡 𝑋𝑡 𝑌𝑡
𝑍𝑡+1 𝑋𝑡+1 𝑌𝑡+1
𝑙𝑛 = 𝛼 𝑙𝑛 + 𝛽 𝑙𝑛
𝑍𝑡 𝑋𝑡 𝑌𝑡
𝑍𝑡+1 𝑍𝑡+1 − 𝑍𝑡 Δ𝑍 Δ𝑍
𝑙𝑛 = 𝑙𝑛 + 1 = 𝑙𝑛 +1 ≈
𝑍𝑡 𝑍𝑡 𝑍 𝑍
Δ𝑍 Δ𝑋 Δ𝑌
=𝛼 +𝛽
𝑍 𝑋 𝑌
Δ𝑍 Δ𝐴 Δ𝑋 Δ𝑌
• If 𝑍 = 𝐴𝛾 𝑋 𝛼 𝑌𝛽 , then =𝛾 +𝛼 +𝛽 .
𝑍 𝐴 𝑋 𝑌
數學公式推導
𝑋 Δ𝑍 Δ𝑋 Δ𝑌
• 𝑍 = = 𝑋𝑌 −1 → = −
𝑌 𝑍 𝑋 𝑌
𝑌 𝑛 Δ𝑌 𝑟 Δ𝑌 𝑛 Δ𝑃
• 𝑌𝑟 = → 𝑟 = 𝑛 −
𝑃 𝑌 𝑌 𝑃
– Growth rate of real GDP = growth rate of
nominal GDP – inflation rate
𝑌𝑟 Δ𝑦 Δ𝑌 𝑟 Δ𝑁
•𝑦= → = −
𝑁 𝑦 𝑌𝑟 𝑁
– Growth rate of real GDP per capita =
growth rate of real GDP – growth rate of
population
Computing Economic
Growth Example
Rule of 70
• How long will it take income to double
(grow by 100%)?
– Income doubling is significant, and will not happen in
a single year.
• Suppose annual growth is 2%, will it take 50
years for us to grow by 100%?
– Compounding growth actually makes it occur faster
than that. It takes about 35 years.
– ―Rule of 70‖
– If the annual growth rate is X%, the size of that
variable doubles every 70/X years.
Rule of 70
• Years to double:
– Income = $1 now
– Growth rate of income per year = x%
– Income doubles after T years. What is T?
• $1 × 1 + 𝑥% 𝑇 = $2
• 𝑇 × ln 1 + 𝑥% = ln(2)
• ln 1 + 𝑥% ≈ 𝑥%
• ln 2 ≈ 0.7
0.7 70
• 𝑇≈ =
𝑥% 𝑥
Rule of 70, Illustrated for $1
Living Standards: 1950 to 2008
Economic Growth Rates Since 1950
Real GDP, Asian Tigers
•Source: Penn World Table 9.0

Real GDP, Taiwan & Trading partners
Growth rate of real GDP, Asian tigers
Growth rate of real GDP,
Taiwan & trading partners
各國經濟成長的差異
• Real GDP per person
– Living standard
– Vary widely from country to country
• Growth rate
– How rapidly real GDP per person grew in
the typical year
• Because of differences in growth rates
– Ranking of countries by income changes
substantially over time
The Variety of Growth Experiences
Earth at Night
Solow Model:
Aggregate production function
• Y = A F(L, K, H, N)
– Y = quantity of output
– A = available production technology
– L = quantity of labor
– K = quantity of physical capital
– H = quantity of human capital
– N = quantity of natural resources
– F( ) is a function that shows how the inputs
are combined.
• Physical capital
– Stock of equipment and structures
– Used to produce goods and services
• Human capital
– Knowledge and skills that workers acquire
through education, training, and
experience
• Natural resources
– Inputs into the production of goods and
services
– Provided by nature, such as land, rivers,
and mineral deposits
• Technological knowledge
– Society’s understanding of the best ways
to produce goods and services
Are natural resources a limit to growth?
• Argument
– Natural resources - will eventually limit
how much the world’s economies can
grow
• Fixed supply of nonrenewable natural
resources – will run out
• Stop economic growth
• Force living standards to fall
• Technological progress
– Often yields ways to avoid these limits
• Improved use of natural resources over time
• Recycling
• New materials
• Are these efforts enough to permit
continued economic growth?
• Prices of natural resources
– Scarcity - reflected in market prices
– Natural resource prices
• Substantial short-run fluctuations
• Stable or falling - over long spans of time
– Our ability to conserve these resources
• Growing more rapidly than their supplies are
dwindling
• A production function has constant returns to
scale if, for any positive number s,
sY = A F(sL, sK, sH, sN)
• That is, a doubling of all inputs causes the
amount of output to double as well.
• Production function F is assumed to have
constant returns to scale.
𝑌 𝐾 𝐻 𝑁
• = 𝐴𝐹 1, , ,
𝐿 𝐿 𝐿 𝐿
• Productivity (Y/L) depends on physical capital
per worker (K/L), human capital per worker
(H/L), and natural resources per worker (N/L),
as well as the state of technology, (A).
• GDP per capita:
GDP
Population
• Productivity (GDP per worker):

GDP
Worker
• Productivity plays a key role in determining the living
standard:
GDP GDP Worker
 
Population Worker Population
Simple Example:
Castaway on an Island
• Table 25.1 here
Simple Example:
Castaway on an Island
• A ladder will help gather fruit.
– Will adding a second ladder help?
• Yes
– Will the second ladder increase fruit
production as much as the first ladder
did?
• No. This is related to the principle of
diminishing marginal productivity.
• MP > 0, however…
– A resource’s MP declines as the
quantity of the resource increases.
Production Function
Table and Graph
Per-worker production function The relationship between real GDP per hour
worked and capital per hour worked, holding the level of technology constant.
Figure 22.3
The Per-Worker Production
Function
The per-worker production
function shows the relationship
between capital per hour worked
and real GDP per hour worked,
holding technology constant.
Increases in capital per hour
worked increase output per hour
worked but at a diminishing rate.
For example, an increase in
capital per hour worked from
$20,000 to $30,000 increases
real GDP per hour worked from
$200 to $350.
An increase in capital per hour worked
from $30,000 to $40,000 increases real GDP per hour worked only from $350 to $475.
Each additional $10,000 increase in capital per hour worked results in a progressively
smaller increase in output per hour worked.

Figure 1
Illustrating the Production Function
Output
per Worker
1 2. When the economy has a
high level of capital, an extra
unit of capital leads to a small
increase in output.
1. When the economy has a low level of

capital, an extra unit of capital leads to a
1 large increase in output.
Capital per Worker

This figure shows how the amount of capital per worker influences the amount of
output per worker. Other determinants of output, including human capital, natural
resources, and technology, are held constant. The curve becomes flatter as the
amount of capital increases because of diminishing returns to capital.
邊際產出
• Marginal product of X, X=L,K,H,N:
Y
MPX 
X
• MPX>0
• MPX declines as X increases
•邊際產出(marginal product)遞減：假設
生產活動同時用到多種要素投入，而且投
入的搭配比例可以改變。如果僅增加要素X
，而其他要素的使用量維持不變，則因為
與之搭配的其他要素相對減少，X 的邊際
產出會逐漸下降。
Focus on Physical Capital
• This first version of the Solow model focused on capital
(rather than resources or labor).
• Reasoning?
– Increasing tools available can increase output per worker.
– Capital stock in wealthy nations exceeds capital in developing
nations.
– Periods of investment growth are periods of expansion.
Cobb-Douglas production function is an
example for the aggregate production
function:
𝑌 = 𝐴𝐾𝛽 𝐿1−𝛽 , 0 < 𝛽 < 1.
This function satisfies the properties:

(i) Constant returns to scale
(ii) Positive marginal product
(iii) Diminishing marginal returns
Y A K L K0.4 L0.6 MPK
331 10 200 10 8.33 3.98
478 10 500 10 12.01 3.98 0.49
577 10 800 10 14.50 3.98 0.33

• If aggregate production function is Cobb-
Douglas, labor productivity is:
𝛽 1−𝛽 𝛽
𝑌 𝐴𝐾 𝐿 𝐾
𝑦= = =𝐴 = 𝐴𝑘 𝛽 .
𝐿 𝐿 𝐿
y=Y/L A k=K/L k0.4 dy/dk
33.1 10 20 3.31
47.8 10 50 4.78 0.49
57.7 10 80 5.77 0.33
66.2 20 20 3.31
95.6 20 50 4.78 0.98
115.4 20 80 5.77 0.66
•在第一個版本的 Solow 模型中，強調資
本的重要性。經濟成長來自於資本的累積
(投資)。
•經濟成長→所得提高→儲蓄增加→投資增
加→資本累積→經濟成長
•由於生產技術具有邊際產出遞減之性質，
資本量高則資本之邊際產出低，使得投資
之報酬率低，投資意願低，資本累積速度
減低，經濟成長率減低。
Implications of Solow Model (1):
Economic Slowdown
•當經濟持續成長，資本不斷累積，假若其
他因素不變，則資本之邊際產出持續遞減
，使經濟成長日漸減低。
• Soviet Union
• Asian Tigers
Making What Explains the Economic Failure of the Soviet
the Union?
Connection Capital per hour worked grew
rapidly in the Soviet Union from 1950 through the
1980s, but diminishing returns to capital resulted in
smaller and smaller increases in real GDP per hour
worked due to a slow rate of technological change.
Soviet managers had little incentive to adopt new
ways of doing things because they didn’t have to
worry about competition and because their pay didn’t
depend on discovering new, better, and lower-cost
ways to produce goods.
Developing and using new technologies is an
important way to gain a competitive edge and higher
profits, the drive for which provides an incentive for
technological change that centrally planned The fall of the Berlin Wall
in 1989 symbolized the
economies are unable to duplicate.
failure of Communism.
Contemporary Russia now has a more market-oriented
system, although the government continues to play a large role in the economy.
MyEconLab Your Turn: Test your understanding by doing related problem 2.10 at the end of this chapter.

Solved Problem 22.2
Using the Economic Growth Model to Analyze the Failure of the Soviet
Economy
Use the economic growth model and the information in the preceding Making the Connection
to analyze the economic problems the Soviet Union encountered.
Solving the Problem

Step 1: Review the chapter material.
Step 2: Draw a graph like Figure 22.3 to illustrate the economic problems of the
Soviet Union.
For simplicity, assume that the Soviet Union experienced no technological change.
The Soviet Union experienced rapid increases in capital per hour worked from 1950 through
the 1980s, but its failure to implement new technology meant that output per hour worked
grew at a slower and slower rate.

Solved Problem 22.2
Using the Economic Growth Model to Analyze the Failure of the Soviet
Economy
Its strategy for raising the standard of living of its citizens was to make continuous increases
in the quantity of capital available to its workers.
The economic growth model helps us understand the flaws in this policy for achieving
economic growth.
MyEconLab Your Turn: For more practice, do related problems 2.7 and 2.8 at the end of this chapter.

Implications of Solow Model (2):
Catch-Up
•資本量高則資本之邊際產出低，使得投資
之報酬率低，投資意願低，資本累積速度
減低，經濟成長率減低
•所得高的國家成長率低，所得低的國家成
長率高，所以所得低的國家終究會趕上高
所得國家。
• Catch-up 在現實世界中並不具一般性。
Catch-up The prediction that the level of GDP per capita (or income per
capita) in poor countries will grow faster than in rich countries.
Catch-up: Sometimes, but Not Always
Figure 22.6
The Catch-up Predicted by
the Economic Growth Model
According to the economic
growth model, countries
that start with lower levels
of real GDP per capita
should grow faster (points
near the top of the line)
than countries that start
with higher levels of real
GDP per capita (points near
the bottom of the line).

Figure 22.7 There Has Been Catch-up among High-Income Countries
If we look
only at
countries that
currently have
high incomes,
we see that
countries such
as Taiwan, Korea,
and Singapore
that had the
lowest incomes in
1960 grew the
fastest between
1960 and 2009.
Countries such as
Switzerland and
the United States
that had the highest
incomes in 1960
grew the slowest.
Note: Data are real GDP per capita in 2005 dollars.
Each point in the figure represents one high-income country.

Are the Developing Countries Catching Up to the High-Income Countries?
Figure 22.8 Most of the World Hasn’t Been Catching Up
If we look at
all countries for
which statistics
are available,
we do not see
the catch-up
predicted by
the economic
growth model.
Some countries
that had low
levels of real GDP
per capita in 1960,
such as Niger,
Madagascar, and
the Democratic Republic of the Congo, actually experienced negative economic growth.
Other countries that started with low levels of real GDP per capita, such as Malaysia and
South Korea, grew rapidly.
Some middle-income countries in 1960, such as Venezuela, hardly grew between 1960
and 2009, while others, such as Israel, experienced significant growth.
Note: Data are real GDP per capita in 2005 dollars.
Each point in the figure represents one high-income country.

Solow Case Study: Africa
• Thirty-seven countries achieved independence
from 1956 to 1977.
– Unique opportunity for new independent yet
impoverished countries
– Solow model was developed in 1956, and applied
consistently to African nations
– In other words, we tried heavy capital investment
projects in Africa.
• Results:
– Fifty years later, policies failed across the continent.
– Why? Incomplete growth theory, faulty policy
– Observations led to a re-examination of growth theory
African Independence Dates
Problem?
• Capital appears to cause economic growth

because there is such a strong correlation
between wealth and output.
• Workers are more productive with more tools.
• However:
– Capital alone is not enough to explain sustained
growth!
– We need a more developed version of the Solow
model to explain economic growth.
Solow II:
Technology Matters
• Increases in technology
– Allow us to produce more
output with each input unit.
– Adding technological advances
to the Solow model means
growth can continue and a zero-
growth long-run equilibrium is
avoidable.
– Graphically, the MPK curve will
shift upward, but it won’t be a
direct parallel shift.
Solow II:
Technology Matters
• Solow II equation:
physical

capital,
 
YA
Fhuman 
capital,
natural
 
resource
– Where ―A‖ is a scalar accounting for technology

change
Solow II: New Technology
Technological Change: The Key to Sustaining Economic Growth
Figure 22.4
Technological Change
Increases Output per
Hour Worked
Technological change
shifts up the production
function and allows more
output per hour worked
with the same amount of
capital per hour worked.
For example, along
Production function1 with
$50,000 in capital per
hour worked, the
economy can produce
$575 in real GDP per
hour worked.
However, an increase in
technology that shifts the
economy to Production function2 makes it possible to produce $675 in real GDP per hour
worked with the same level of capital per hour worked.
In the long run, a country will experience an increasing standard of living only if it
experiences continuing technological change.
New Growth Theory
•Solow 指出了技術進步的重要性，但並未
解釋如何才能提昇技術。
•新成長理論：
– 解釋技術進步的條件
– 強調人力資本---比較不會有邊際產出遞減
，而且有外溢效果 (spillover effect)。
• 技術進步和人力資本的累積需要什麼樣的
條件?
• 全世界的經濟成長大約在工業革命之後才
有明顯成長. 為什麼工業革命發生在英國?
• 研究發展和知識的累積需要財產權的保障.
Making Why Did the Industrial Revolution Begin in
the England?
Connection
Nobel Laureate Douglass North of Washington
University points to the Glorious Revolution of
1688 as greatly aiding economic growth in England.
After that date, the British court system became

independent of the king, and the British Parliament
took control over the government.
As a result, the British government was credible

when it committed to upholding private property,
protecting wealth, and eliminating arbitrary
increases in taxes.
These institutional changes gave entrepreneurs

the incentive to make the investments necessary to use the important
technological developments of the second half of the eighteenth century.
MyEconLab Your Turn: Test your understanding by doing related problem 1.3 at the end of this chapter.

Property Rights
• 財產權：人們對所擁有的資源的控制力。
• 財產權不明將影響到投資的意願。
• 政治的不安定，或是更廣泛定義的「尋租
行為」(rent-seeking activity)，是對財產權
最大的傷害。
• 尋租行為：純粹以「所得重分配」為目的
的資源消耗行為。可能是非法的，如貪污
、盜匪等。也可能是合法的，如苛捐雜稅
、政策遊說等。
Property Rights, Political Stability
• To foster economic growth
– Protect property rights
• Ability of people to exercise authority over the
resources they own
• Courts – enforce property rights
– Promote political stability
• Property rights
– Prerequisite for the price system to work
• Lack of property rights
– Major problem
– Contracts are hard to enforce
– Fraud goes unpunished
– Corruption
• Impedes the coordinating power of markets
• Discourages domestic saving
• Discourages investment from abroad
• Political instability
– A threat to property rights
– Revolutions and coups
– Revolutionary government might
confiscate the capital of some businesses
– Domestic residents - less incentive to
save, invest, and start new businesses
– Foreigners - less incentive to invest
The Xiaogang Agreement (安徽小崗)
Xiaogang Agreement
• Agreement:
– Keep all output above government quota
– No longer take money or food from government
• Result
– Agricultural boon in Xiaogang
– More output than previous five years combined
– Chinese leaders instituted agricultural reforms in
1980s and manufacturing reforms in 1990s
• Lesson?
– China grew not because of new resources or technology,
but because of the institution of private property rights
Institutions, Incentives, and Economic Growth
Institutions
• Institutions
– Rule of games
– Significant organizations, laws, and social mores in
society that frame the incentive structure within which
individuals and firms act
– With the right institutions, economic growth is natural.
– Different institutions can create different incentives for
individuals and change their behavior, which can
promote or hinder growth.
Institutions that Foster
Economic Growth
Institutions
• Positive institutions
– Transparent and consistent government, private
property rights, stable money and prices
• Negative institutions
– Corruption, political instability
physical 
capital,
 
 human 
capital,
YAF 
natural
resources,
 
 institutio

 ns 
Institutions Determine
Incentives
• Voluntary investment and production
require sacrifice and patience.
– Recall that spent resources
and work are required before
output is produced.
– Often a time lag before payoffs
as well
– Relevant example: going to
college
Institutions Determine
Incentives
• Investment and production occur naturally under
certain conditions.
– Voluntary investment occurs if
expected return > costs
– College example again:
• If you are in college, you believe that your degree
will provide you with higher wages above and
beyond the cost of tuition and giving up four years of
income.
• College is an example of voluntary investment in
human capital.
Acemoglu and Robinson:
Institutions Matter
• Extractive Institutions: Such institutions
are designed to extract incomes and
wealth from one subset of the society to
benefit a different subset.
• Inclusive Institutions: Such institutions
allow and encourage participation by the
great mass of people in economic
activities that make best use of their
talents and skills and that enable
individuals to make the choices they wish.
Korea at Night
Inclusive (廣納型)
• Inclusive Economic Institution:
– Secure property rights, laws and order
– Markets and state support for markets
– Open to free entry to new business
– Uphold contracts
– Access to education and opportunity for
the great majority of citizens
– Supported by political institutions which
tend to distribute political power equally in
society
Extractive(榨取型)
• Extractive Economic Institution
– Designed by politically powerful elites to
extract resources from the rest of society
– Supported by political institutions which
concentrate political power in the hands of
political elites and put little constraint on
how political power can be used
– Reduce the returns to and increase the
cost of investments
Creative Destruction
• Why would a society adopt extractive
economic institution?
– Technology progress involves creative
destruction, as pointed out by
Schumpeter.
– Some win, some lose.
Political Creative Destruction
• Political creative destruction:
– New technology
new rich people want more political power
pose a threat to the existing rulers
– New economic activities fall outside the
control of existing rulers
• Existing rulers may want to block the
adoption of new technology
Luddites
• 16 世紀西班牙在中南美殖民
– 印加
– 阿茲特克
• 16 世紀英國在北美殖民
– 印地安
• 為什麼掠奪式的制度不利長期的經濟成長?
– 長期的經濟成長來自創新
– 創新的報酬
– 破壞性創新 (creative destruction) vs. 既得
利益
• Growth-friendly institutions
Growth-friendly incentives
Investments in physical capital, human
capital, technology
Economic growth
Research and Development
• Knowledge – public good
– Government – encourages research and
development
• Farming methods
• Aerospace research (Air Force; NASA)
• Research grants
– National Science Foundation
– National Institutes of Health
• Tax breaks
• Patent system
Education
• Education
– Investment in human capital
– Gap between wages of educated and
uneducated workers
– Opportunity cost: wages forgone
– Conveys positive externalities
– Public education - large subsidies to
human-capital investment
Free Trade
• Inward-oriented policies
– Avoid interaction with the rest of the world
– Infant-industry argument
• Tariffs
• Other trade restrictions
– Adverse effect on economic growth
Free Trade
• Outward-oriented policies
– Integrate into the world economy
– International trade in goods and services
– Economic growth
• Amount of trade – determined by
– Government policy
– Geography
• Easier to trade for countries with natural
seaports
Figure 22.10 Globalization and Growth
Developing countries that were more open to foreign trade and investment grew much
faster during the 1990s than developing countries that were less open.

International spread of technology
• Today, Bangladesh exports $2 billion
worth of shirts and clothing.
• Desh Garments Ltd. was founded in
1977. It was set up in joint venture with
Daewoo of South Korea.
• Korean textile companies were restricted
by quota set up by U.S. and Europe.
• Daewoo trained 130 workers for Desh.
Desh paid Daewoo 8% royalty on each
shirt sold.
• A great success for Desh Garments:
produced 43,000 shirts in 19802.3
million in 1987  9.6 million in 2006
• A great success for Bangladesh: Almost
all the130 workers trained in Korea
eventually left Desh Garments to set up
their own firms.
Growth Accounting
• 利用生產函數的概念，將GDP的成長率拆
解成要素投入的成長與生產技術的進步。
• GDP和要素投入的成長是可觀察和衡量的
，生產技術的進步就變成了一個「殘餘項
」。
• Cobb-Douglas Production Function:
 1 
Y  AK L
• Growth Accounting:
Y A K L
   (1   )
Y A K L
• A 稱為多因素生產力(multifactor
productivity)或總因素生產力 (total factor
productivity)。
• △A/A 有時也稱為 Solow residual。
• 下表為四小龍的成長會計，樣本時間為
1966—1990，取自Young (1995)，同時見於
Barro & Sala-i-Martin (2005, p.440)。
Growth Contribution Contribution TFP
rate of from capital from labor Growth
GDP rate
Hong 7.3 3.0 2.0 2.3
Kong
(β=0.37)
Singapore 8.7 5.6 2.9 0.2
(β=0.49)
Korea 10.3 4.1 4.5 1.7
(β=0.30)
Taiwan 9.4 3.2 3.6 2.6
(β=0.26)
© 2013 Pearson Education, Inc. Publishing as Prentice Hall

104 of
• 成長會計可作為對經濟成長的初步分析，
但並未對成長的「真正原因」有所解釋。
• 前表顯示，四小龍的GDP成長主要仍來自
要素投入的成長，而非生產技術的成長。
那麼，所謂「成長的奇蹟」就不能稱為奇
蹟了─奇蹟是難以被解釋的。
• Krugman (1994): The Myth of Miracle.
• 可是Hsieh (2002) 的分析得到不同的結論，
如下表 (Barro & Sala-i-Martin, 2005, p.444)
TFP growth rate
Hong Kong, 1966-1991 2.7
Singapore, 1972—1990 2.2
South Korea, 1966—1990 1.5
Taiwan, 1966—1990 3.7

Growth 2018

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Growth 2018

Hochgeladen von

Copyright:

Verfügbare Formate

Production and Growth

PowerPoint Slides prepared by:

© 2013 Pearson Education, Inc. Publishing as Prentice Hall 4 of 47

© 2013 Pearson Education, Inc. Publishing as Prentice Hall 7 of 47

•Source: Penn World Table 9.0

• Productivity (GDP per worker):

© 2013 Pearson Education, Inc. Publishing as Prentice Hall 42 of 47

1. When the economy has a low level of

Capital per Worker

𝑌 = 𝐴𝐾𝛽 𝐿1−𝛽 , 0 < 𝛽 < 1.

This function satisfies the properties:

331 10 200 10 8.33 3.98

478 10 500 10 12.01 3.98 0.49

577 10 800 10 14.50 3.98 0.33

© 2013 Pearson Education, Inc. Publishing as Prentice Hall 53 of 47

Solving the Problem

© 2013 Pearson Education, Inc. Publishing as Prentice Hall 54 of 47

© 2013 Pearson Education, Inc. Publishing as Prentice Hall 55 of 47

Catch-up: Sometimes, but Not Always

© 2013 Pearson Education, Inc. Publishing as Prentice Hall 57 of 47

© 2013 Pearson Education, Inc. Publishing as Prentice Hall 58 of 47

© 2013 Pearson Education, Inc. Publishing as Prentice Hall 59 of 47

• Capital appears to cause economic growth

– Where ―A‖ is a scalar accounting for technology

After that date, the British court system became

As a result, the British government was credible

These institutional changes gave entrepreneurs

© 2013 Pearson Education, Inc. Publishing as Prentice Hall 69 of 47

© 2013 Pearson Education, Inc. Publishing as Prentice Hall 98 of 47

© 2013 Pearson Education, Inc. Publishing as Prentice Hall

Hong Kong, 1966-1991 2.7

Singapore, 1972—1990 2.2

South Korea, 1966—1990 1.5

Taiwan, 1966—1990 3.7

Das könnte Ihnen auch gefallen