Tuesday

 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 7 of 23
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The productivity determinants are:
-1- physical capital
-2- human capital
-3- natural resources
-4- technological knowledge
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-3- Natural resources
Natural resources are production inputs provided by nature, including land, rivers, and mineral deposits.
There are two forms of natural resources: renewable and nonrenewable.
A forest is a renewable resource.
When a tree is cut down a seedling can be planted to replace it for future harvest.
Oil is a nonrenewable resource.
Oil is produced by nature over many millions of years, once the supply of oil is depleted, we cannot create more.
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Differences in natural resources result in some of the standards of living differences among countries.
The economic success of the United States is partly a result of the large supply of land for agriculture.
Some Middle East countries are rich simply because they sit on large pools of oil.
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In-country natural resources are not necessary for an economy to be highly productive.
Japan is one of the richest countries in the world despite having few natural resources.
International trade is key to Japan's economic success.
Japan imports natural resources such as oil and exports manufactured goods to economies from where they obtained the natural resources.
Most natural resources are sold in international markets and prices are about the same around the world including within the country from where they are sourced.
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-4- Technological knowledge
Technological knowledge is society’s knowledge of the most advanced and best ways known to produce goods and services.
Most Americans worked on farms a hundred years ago because farm technology of those times required a high input of labor per unit of output.
Thanks to advances in farming technology today a small fraction of the population, 1~2% in the U.S. are considered to be farmers, can produce enough food to feed the entire country, plus much surplus available for export.
Farming technological advances made labor available for production of other goods, resulting in vastly increased quantity and value of overall production.
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Technological knowledge has many forms.
Some technology is common knowledge.
After one person uses it soon everyone becomes aware of and uses.
Soon after Henry Ford successfully introduced assembly line production, other carmakers did the same.
Some technology is proprietary, known only by the company that discovers or develops it, only the Coca-Cola Company knows the Coke secret recipe.
Some technology is proprietary for a short time.
When a drug company discovers a new medicine the patent system gives the company the right to exclusively manufacture it for a number of years.
When the patent expires, typically after about 15 years, other companies are allowed to make the drug as a generic.
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It is important to distinguish between technological knowledge and human capital.
They are closely related, but there is an important difference.
Technological knowledge is society’s knowledge of the most advanced and best ways to produce goods available to be learned by workers.
Human capital is the skills and knowledge workers acquire through education, training, and experience.
Consider the textbook analogy:
Technological knowledge is the content and quality of society's technical textbooks.
Human capital is the acquisition by students of the knowledge presented in the textbooks.
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internationaltrademadeJapanprosperous
こくさいぼえき はにほんをはんえいさせた (Japanese kana letters only)
kokusaibōekiwaNihonohaneisaseta (in Roman letters)
国際貿易は日本を繁栄させた (characters and letters, regular way to write)

One distinguishing feature of Japanese is there are no spaces between words.
Two early historic advances in languages were replacing characters with letters and putting spaces between words.
Japanese does not use spaces and only partially uses its own letters in place of characters.
Since it's phonetic, easy to pronounce and absorbs many words from other languages especially English, Japanese would be a great choice for the universal language if it used Roman letters and spaces.