1、R. GLENNHUBBARDANTHONY PATRICKOBRIENFIFTH EDITION 2015 Pearson Education, Inc.2 2015 Pearson Education, Inc.Chapter Outline andLearning Objectives11.1 Economic Growth over Time and around the World11.2 What Determines How Fast Economies Grow?11.3 Economic Growth in the United States11.4 Why Isnt the
2、 Whole World Rich?11.5 Growth PoliciesCHAPTER11 Long-Run Economic Growth: Sources and Policies3 2015 Pearson Education, Inc.Obtaining Economic GrowthIn the previous chapter, we looked at ways to measure economic growth in the long and short terms.In this chapter, we will consider the effects of diff
3、erent government policies on long-term economic growth. Economic growth, after all, is not inevitable; history has seen long periods of stagnation where no sustained increases in output per capita occurred.Why have some countries been able to achieve rapidly increasing real GDP per capita, while oth
4、er countries have failed to keep pace? Our goal in this chapter is to develop a model of economic growth to help answer questions such as this.LEARNING OBJECTIVE4 2015 Pearson Education, Inc.Economic Growth over Time and around the World11.1Define economic growth, calculate economic growth rates, an
5、d describe global trends in economic growth.5 2015 Pearson Education, Inc.From Prehistory to the Middle AgesEconomist Brad DeLong estimates that in 1,000,000 B.C., our ancestors had a GDP per capita of approximately $145.He estimates that GDP per capita in 1300 A.D. was also about $145. In other wor
6、ds, no sustained economic growth occurred before the middle ages; a peasant on a farm in 1300 A.D. was about as well off his ancestors.6 2015 Pearson Education, Inc.The Industrial RevolutionSignificant economic growth did not really begin until the Industrial Revolution, the application of mechanica
7、l power to the production of goods and services which began in England around 1750. Before this, production of most goods had relied on human or animal power.The use of mechanical power allowed England and other countrieslike the United States, France, and Germanyto begin to experience long-run econ
8、omic growth.7 2015 Pearson Education, Inc.MakingtheConnection Why Did the Industrial Revolution Begin in England?Nobel Laureate Douglass North argues that the Glorious Revolution of 1688 was a key turning point in the economic history of Britain. After that date, the British Parliament, rather than
9、the king, controlled the government. The court system also became independent of the king.The government was then able to make credible promises regarding upholding property rights, protecting wealth, and the elimination of arbitrary tax increases. This, claims North, made entrepreneurs willing to m
10、ake the investments necessary for the Industrial Revolution to take hold.8 2015 Pearson Education, Inc.Average Annual Growth Rates Are ImportantThe graph shows Brad DeLongs estimated average annual growth rates for the world economy.The Industrial Revolution, and its subsequent spread throughout the
11、 world, resulted in sustained increases in real GDP per capita. Average annual growth rates for the world economyFigure 11.19 2015 Pearson Education, Inc.Why Do Growth Rates Matter?The differencebetween 1.3% and2.3% may not seemlike much; but over along period, it makes aremarkable difference.Over 5
12、0 years, a 1.3%growth rate leads toabout a 91% increasein real GDP per capita.But a 2.3% growth rate leads to about a 212% increase.In the long run, small differences in economic growth rates result in big differences in living standards.Average annual growth rates for the world economyFigure 11.110
13、 2015 Pearson Education, Inc.Differences in Incomes across CountriesEconomists often refer to the high-income countries (or industrial countries) of Western Europe, Australia, Canada, Japan, New Zealand, and the United States, in comparison to the poorer developing countries of the rest of the world
14、.The 1980s and 1990s have seen some countries progress out of the developing category, like Singapore, South Korea, and Taiwan; these are often referred to as newly industrializing countries.Real GDP per capita is markedly different across the world, even after correcting for cost of living differences. In 2012 it ranged from a high of $103,900 in Qatar to a low of $400 in the Democratic Republic of the Congo.
