Copyright © 2003 Pearson Education, Inc.
Chapter 3 Slide 1
Historic Growth and
Contemporary Development:
Lessons and Controversies
Chapter 3
Copyright © 2003 Pearson Education, Inc.
Chapter 3 Slide 2
The Growth Game


Growth rates of national income are
followed closely by policy-makers
In order to better understand
contemporary growth prospects, it is
useful to examine historical growth
patterns
Copyright © 2003 Pearson Education, Inc.
Chapter 3 Slide 3
The Economics of Growth:
Capital, Labor, and Technology


Capital accumulation
Population and labor force growth
Copyright © 2003 Pearson Education, Inc.
Chapter 3 Slide 4
Figure 3.1 Effect of Increases in
Physical and Human Resources on
the Production Possibility Frontier
Copyright © 2003 Pearson Education, Inc.
Chapter 3 Slide 5
Figure 3.2 Effect of Growth of
Capital Stock and Land on the
Production Possibility Frontier
Copyright © 2003 Pearson Education, Inc.
Chapter 3 Slide 6
The Economics of Growth:
Capital, Labor, and Technology



Capital accumulation
Population and labor force growth
Technological progress
Copyright © 2003 Pearson Education, Inc.
Chapter 3 Slide 7
Figure 3.3 Effect of Technological
Change in the Agricultural Sector on
the Production Possibility Frontier
Copyright © 2003 Pearson Education, Inc.
Chapter 3 Slide 8
Figure 3.4 Effect of Technological
Change in the Industrial Sector on the
Production Possibility Frontier
Copyright © 2003 Pearson Education, Inc.
Chapter 3 Slide 9
The Historical Record: Kuznet’s
Six Characteristics of Modern
Economic Growth


High rates of per
capita income and
population growth
High rates of total
factor productivity
increase
Copyright © 2003 Pearson Education, Inc.
Chapter 3 Slide 10
Figure 3.5 Factor Accumulation
Accounts for Only a Fraction of
Growth
Copyright © 2003 Pearson Education, Inc.
Chapter 3 Slide 11
The Historical Record: Kuznet’s
Six Characteristics of Modern
Economic Growth



High rates of per
capita income and
population growth
High rates of total
factor productivity
increase
high rates of
economic structural
transformation
Copyright © 2003 Pearson Education, Inc.



High rates of social,
political, and
ideological
transformation
International
economic outreach
Limited international
spread of economic
growth
Chapter 3 Slide 12
The Limited Value of the
Historical Growth Experience:
Differing Initial Conditions



Physical and human
resource
endowments
Relative levels of
per capita income
and GNP
Climatic differences
Copyright © 2003 Pearson Education, Inc.


Population size,
distribution, and
growth
The historical role of
international
migration
Chapter 3 Slide 13
Copyright © 2003 Pearson Education, Inc.
Chapter 3 Slide 14
The Limited Value of the
Historical Growth Experience:
Differing Initial Conditions




Physical and human
resource endowments
Relative levels of per
capita income and GNP
Climatic differences
Population size,
distribution, and growth





Copyright © 2003 Pearson Education, Inc.
The historical role of
international migration
The growth stimulus of
international trade
Basic R&D capabilities
Stability and flexibility of
political and social
institutions
Are living standards
converging?
Chapter 3 Slide 15
Figure 3.6 Convergence among
OECD Countries but Divergence
in the World as a Whole
Copyright © 2003 Pearson Education, Inc.
Chapter 3 Slide 16
Figure 3.6 Convergence among
OECD Countries but Divergence
in the World as a Whole cont’d
Copyright © 2003 Pearson Education, Inc.
Chapter 3 Slide 17
Concepts for Review






Brain drain
Capital
accumulation
Capital-augmenting
technological
progress
Capital-saving
technological
progress
Capital stock
Dualism
Copyright © 2003 Pearson Education, Inc.






Economic growth
Economic planning
Equalization
(economic and
social)
Free trade
Human capital
Infrastructure
Chapter 3 Slide 18
Concepts for Review, cont’d




Labor-augmenting
technological
progress
Labor-saving
technological
progress
Modernization ideals
Neutral
technological
progress
Copyright © 2003 Pearson Education, Inc.






Production
possibility curve
Rationality
Research and
Development (R&D)
Technological
progress
Terms of trade
Total factor
productivity (TFP)
Chapter 3 Slide 19