Economic Growth

Economic growth
(A percentage rate of growth per quarter)

• increase in real GDP
• (or)
• increase in real GDP per capita
• real GDP / population, compared to previous quarters 

growth lessens the burden on scarcity 

Rule of 70: provides a mathematical grasp of the effect of economic growth rate changes.

• Number of years for variable to double = 70 / Annual Growth Rate of the Variable

Why do we see growth in some areas and not in others?

 

Institutions that promote growth

• strong property rights
• patents and copyrights
• efficient financial institutions
• widespread education
• free trade
• competitive market system 

Non-institutional factors

(supply) increase in:

• quantity and quality of natural resources 
• quantity and quality of human resources 
• stock of capital goods 
• advances in technology     

(demand) increases in:

• total spending

(efficiency) increase in:

• allocative efficiency 
• productive efficiency

Discussion: is growth desirable?