Economic Growth

Topics: Economic growth, Economics, Macroeconomics Pages: 26 (8596 words) Published: August 4, 2013
Economic growth
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GDP real growth rates, 1990–1998 and 1990–2006, in selected countries.

Rate of change of Gross domestic product, world and OECD, since 1961

Economic growth caused the production-possibility frontier to shift outward. Economic growth is the increase in the amount of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP.[1] Growth is usually calculated in real terms – i.e., inflation-adjusted terms – to eliminate the distorting effect of inflation on the price of goods produced. In economics, "economic growth" or "economic growth theory" typically refers to growth of potential output, i.e., production at "full employment". As an area of study, economic growth is generally distinguished from development economics. The former is primarily the study of how countries can advance their economies. The latter is the study of the economic aspects of the development process in low-income countries. See also Economic development. Since economic growth is measured as the annual percent change of gross domestic product (GDP), it has all the advantages and drawbacks of that measure. Contents [hide]

1 Definitions and history
1.1 Economic growth versus the business cycle
1.2 Historical sources of economic growth
1.3 Economic growth per capita
1.4 Measuring economic growth
1.5 The power of annual growth
2 Theories of economic growth
2.1 Classical growth theory
2.2 The neoclassical growth model
2.3 Salter cycle
2.4 Endogenous growth theory
2.5 Energy and energy efficiency theories
2.6 Unified growth theory
2.7 The big push
2.8 Schumpeterian growth
3 Institutions and growth
4 Human capital and growth
5 Inequality and economic growth
5.1 Evidence
6 Quality of life
7 Negative effects of economic growth
7.1 Resource depletion
7.2 Environmental impact
7.3 Equitable growth
7.4 Implications of global warming
8 See also
9 References
10 Further reading
11 External links
11.1 Articles and lectures
11.2 Data
Definitions and history[edit source | editbeta]

Economic growth versus the business cycle[edit source | editbeta] Economists distinguish between short-run economic changes in production and long-run economic growth. Short-run variation in economic growth is termed the business cycle. The business cycle is made up of booms and drops in production that occur over a period of months or years. Generally, economists attribute the ups and downs in the business cycle to fluctuations in aggregate demand. In contrast, the topic of economic growth is concerned with the long-run trend in production due to structural causes such as technological growth and factor accumulation. The business cycle moves up and down, creating fluctuations around the long-run trend in economic growth. Historical sources of economic growth[edit source | editbeta] Main article: Productivity improving technologies (historical) Economic growth has traditionally been attributed to the accumulation of human and physical capital, and increased productivity arising from technological innovation.[2] Economic growth was also the result of developing new products and services, which have been described as "demand creating".[3] Before industrialization technological progress resulted in an increase in population, which was kept in check by food supply and other resources, which acted to limit per capita income, a condition known as the Malthusian trap.[4] The rapid economic growth that occurred during the Industrial Revolution was remarkable because it was in excess of population growth, providing an escape from the Malthusian trap.[5] Countries that industrialized eventually saw their...


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^ Ayres, Robert U. (1998). Turning Point: an End to the Growth Paradigm. London: Earthscan Publications. pp. 193–4. ISBN 9781853834394.
^ Lucas, 1988
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^ Quote from Philippe Aghion, 2002, Schumpeterian Growth Theory and the Dynamics of Income Inequality, Econometrica, 70(3), 855–882.
• Also see Wendy Carlin and David Soskice, 2006, Macroeconomics: Imperfections, Institutions & Policies, specifically chapter 14.
^ • Philippe Aghion and Peter Howitt, 1992, A Model of Growth Through Creative Destruction, Econometrica, 60(2), 323–351.
• Philippe Aghion, 2002, Schumpeterian Growth Theory and the Dynamics of Income Inequality, Econometrica, 70(3), 855–882.
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^ Barro, Robert J., and Jong-Wha Lee. 2001. "International data on educational attainment: Updates and implications." Oxford Economic Papers 53, no. 3 (July): 541–563.
^ Hanushek, Eric A., and Dennis D. Kimko. 2000. "Schooling, labor force quality, and the growth of nations." American Economic Review 90, no. 5 (December): 1184–1208 [1]
^ • Hanushek, Eric A., and Ludger Woessmann
• Hanushek, Eric A., and Ludger Woessmann. 2011. "How much do educational outcomes matter in OECD countries?" Economic Policy, 26, no. 67: 427–491.[3]
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^ Perotti, Roberto, 1996, “Growth, Income Distribution, and Democracy: What the Data Say” Journal of Economic Growth, 1(2), 149–187.
^ Inequality and Unsustainable Growth: Two Sides of the Same Coin? Andrew G. Berg and Jonathan D. Ostry| IMF STAFF DISCUSSION NOTE | April 8, 2011
^ "Is Inequality Necessary?" by Timothy Noah, The New Republic December 20, 2011
^ In Pursuit of Happiness Research. Is It Reliable? What Does It Imply for Policy? The Cato institute. April 11, 2007
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^ Case, K.E., and Fair, R.C. 2006. Principles of Macroeconomics. Prentice Hall. ISBN 0-13-222645-6, ISBN 978-0-13-222645-5.
^ a b Ronald Bailey (2004-02-04). "Science and Public Policy - Reason Magazine". Reason.com. Retrieved 2010-12-22. Unknown parameter |unused_data= ignored (help)
^ a b Hayward, Steven F
^ Wells, David A. (1891). Recent Economic Changes and Their Effect on Production and Distribution of Wealth and Well-Being of Society. New York: D. Appleton and Co. ISBN 0-543-72474-3.Opening line of the Preface.
^ Smil, Vaclav (2004). Enriching the Earth: Fritz Haber, Carl Bosch, and the Transformation of World Food Production. MIT Press. ISBN 0-262-69313-5.
^ Hall, Charles A.S.; Cleveland, Cutler J.; Kaufmann, Robert (1992). Energy and Resource Quality: The ecology of the Economic Process. Niwot, Colorado: University Press of Colorado.
^ Jared Diamond. Collapse: How Societies Choose to Fail or Succeed. Penguin, 2006.
^ Ravallion, M. (2007) Inequality is bad for the poor in S. Jenkins and J. Micklewright, (eds.) Inequality and Poverty Re-examined, Oxford University Press, Oxford.
^ Jaccard, M. 2005 Sustainable Fossil Fuels. Cambridge University Press.
Barro, Robert J. (1997) Determinants of Economic Growth: A Cross-Country Empirical Study. MIT Press: Cambridge, MA.
Galor, O. (2005) From Stagnation to Growth: Unified Growth Theory. Handbook of Economic Growth, Elsevier.
Grier, Kevin (2008). Empirics of Economic Growth. The Concise Encyclopedia of Economics (2nd ed.). Library of Economics and Liberty. ISBN 978-0865976658. OCLC 237794267.
Halevi, Joseph; Laibman, David and Nell, Edward J. (eds.) (1992) Beyond the Steady State: Essays in the Revival of Growth Theory, edited with, London, UK:
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