Monday

 

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 9 The Real Economy in the Long Run
Chapter 25 of 36 Production and Growth
Section 2 of 23
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The average income in a rich country including the United States, Japan, and Germany is more than ten times the average income in a poor country including India, Indonesia, Nigeria.
People in richer countries have better nutrition, housing, sanitation, healthcare, longer life expectancy, and more automobiles, telephones, televisions.
Over time, within a country there can be large standard of living changes .
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Over the past century in the United States average income, as measured by real GDP per person, has grown yearly by about two percent.
Although two percent might seem small, per the “rule of 72” where you divide 72 by the rate of growth a two percent growth rate means average income doubles about every 35 years.
This has resulted in average income today in the U.S. of about eight times that of a century ago.
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In recent years some East Asian countries such as Singapore, South Korea, and Taiwan have had an economic growth rate of about seven percent a year.
At this rate average income doubles every ten years.
With such rapid growth a country in one generation can elevate from being a poor country to being a rich one.
In some African countries, including Chad, Ethiopia, and Nigeria, average income has stagnated for many years.
Figures A and B show how amounts of populations living in extreme poverty were reduced from 1993 to 2011 in selected countries.
Source of Figures A and B
https://blogs.worldbank.org/en/opendata/2017-atlas-sustainable-development-goals-new-visual-guide-data-and-development?utm_source=chatgpt.com
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Figure C shows a comparison of Florida, Cuba, and Russia.
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An economy's gross domestic product (GDP) measures an economy’s total income earned total spending on goods and services.
Current level of GDP is a good gauge of economic prosperity.
Growth rate of GDP is a good gauge of economic progress.
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In this chapter we look at the long-run determinants of real GDP level and growth.
We proceed in three steps
-1- examine international data on per person real GDP and see how the level and growth of living standards vary around the world
-2- examine the role of productivity
· amount of goods and services produced for each hour of a worker's time
· how a nation's standard of living is determined by the productivity of its workers
· the factors that determine a nation's productivity
-3- consider the link between productivity and the economic policies of a nation’s government
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relationship between productivity and economic policies
seisansei to keizai seisaku no kankei