1. Chapter 15 Economic Growth and Development

2. Economic Growth  Real Per Capita GDP = Real GDP/Population  Shifts in The PPC, shift the Real Potential GDP (LRAS)

3. Components of Growth  Increase the Quantity and Quality of Resources Rate of Growth of Quantity of Capital  Investment through savings Rate of Growth of Quantity of Labor  Population increases  Immigration

4.  Rate of Growth of Resource Quality – Productivity Labor  Education and Training Human Capital  Better health Health Care Capital: Physical Capital– plant and equipment  Technology Types  Invention – new products and ways to produce them  Innovation – development of products and production processes commercially Research and Development

5.  Positive political and social environment  Free trade  Economic Freedom and Property Rights Property Rights – the right of an owner to use and trade property  Encourages entrepreneurial ship if we can keep things  Promotes economic growth Economic Freedom of Choice

6. Summary Saving Immigration Education Health Care Research and Development A Positive political and social environment Free trade Economic Freedom and Property Rights

7. Growth Results Causes more pollution Less resources Improves standard of living More leisure Crime rates fall More income More goods

8. Club of Rome  In the next 100 years at the present rate of population growth, industrialization, pollution, food production, and resource depletion this planet will reach its limit.  Bioeconomic world Lower incomes Basic Consumption Labor intensive production Use renewable resources  Switching Point Recycling Conservation Zero population growth

9. Economic Development  Raising the standard of living in poor countries (75% of the world is in poverty)

10. Less Developed Countries - LDC's  Examples South and East Asia Africa Middle East South and Central America

11. Characteristics  Land - Rural/agricultural in a Tropical climate (Southern countries) Bad infrastructure  Economy - Low per capita income and Unemployment Unskilled labor force Lack of Natural Resources  People - Rapid population growth with Inadequate health care and education High Birth rates Low life expectancy Malnutrition  Government: Control by wealthy elite Political instability

12. Characteristics cont.  People - Rapid population growth with Inadequate health care and education High Birth rates Low life expectancy Brain Drain Malnutrition High rates of illiteracy Underemployment Often women are second class citizens  Government: Control by wealthy elite Political instability

13. Solutions Peace Concentrate funds on capital and education  Encourage saving  Research and Development Foreign aid Property rights Control Population Growth

14. Obstacles  Political instability and corruption  Lack of investment (saving) and education  Overpopulation and disease  Cultural differences

15. Industrially Advanced Country (IAC)  Examples Western Europe North America Australia New Zealand Japan  Why would an IAC want to help a LDC? Ally Future trading partner  Policy Foreign aid Decrease tariffs and quotas Provide debt relief