ECON 102 1st Edition Lecture 18 Outline of Last Lecture I Aggregate Production Function Outline of Current Lecture II Differing Growth Rates a Factors III Role of Government Policies a Role of Policies Current Lecture Differing Growth Rates A number of factors influence differences among countries in their growth rate These are government policies and institutions that alter o Savings and investment spending o Foreign Investment Adding to the domestic stock of savings and investment Foreign Capital o Education o Infrastructure Essential to moving things around Like Physical Capital o Research and development o Political stability o The protection of property rights Protections like Copyrights which allow the economy to grow Role of Government Policies Government policies can either make or break growth in an economy Main channels for government policies actions o Subsidies to infrastructure roads ports communication networks sanitation and drinking water supply o Subsidies to education at all levels especially primary and secondary education o Subsidies for R D Brazil in cultivating savanna land These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute o Role in setting up and running a financial system Protection of Property Rights o Rights of owners to dispose of valuable items o Intellectual property rights Rights to accrue the rewards of an innovation Patents Copyrights etc Political Stability and Good Governance o Laws and institutions that fairly enforce it along with a political system that maintains institutions o Bureaucratic red tape and corruption Long run economic growth is sustainable if it can continue in the face of the limited supply of natural resources and the impact of growth on the environment Differing views about the impact of limited natural resources on long run economic growth turn on the answers to three questions 1 How large are the supplies ok key natural resources 2 How effective will technology be at finding alternatives to natural resources 3 Can long run economic growth continue in the face of resource scarcity
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