1. Long Run Economic Growth
Lesson 37
Sections 37, 38

2. Comparing Economies Across Time And Space (37)
Real GDP per Capita
Growth Rates
Rule of 70 (70 years to double)
Sources of Long-Run Growth
The Crucial Importance of Productivity
Labor Productivity needs to steadily increase for growth
Explaining Growth in Productivity
Physical Capital – machines that aid productivity
Human Capital – education
Technology – probably most important driver of growth

4. Productivity and Growth (38)
Accounting For Growth: The Aggregate Production Function
Aggregate Production Function
How physical capital, education, and technology affect productivity per person
Diminishing Returns to Physical Capital
As physical capital is added (all other things being equal) the productivity gains shrink
Growth Accounting
Allows for accounting of the effects of greater physical and human capital on economic growth
Total Factor Productivity
The output with a given amount of physical and human capital, and labor
What About Natural Resources?
Countries that have excellent natural resources tend to have higher productivity rates, but resources are finite.

5. Success, Disappointment, and Failure
East Asia’s Miracle
Growth rates of 7% and higher for most of the last half of the 1900’s
High savings, good education, high investment
Convergence Hypothesis
Relative backwardness
Latin American Disappointment
Low savings, low education, high inflation, bank failures
Africa’s Troubles
War, corruption, AIDS, Ebola, Malaria, Debt