-sustained increase in real GDP over time as well as per capita over time
-growth leads to greater prosperity for society
-lessons burden of scarcity
Conditions for Growth
•Rule of Law
•Sound Legal and Economic Institutions
•Economic Freedom
•Respect for Private Property
•Political & Economic Stability
–Low Inflationary Expectations
•Willingness to sacrifice current consumption in order to grow
•Saving
•Trade
Physical capital
-tools, machinery, and factories
-physical capital is a product of investment
-it takes capital to make capital
Technology and Productivity
-research and development innovation and invention yield increase in tech
-more tech= more productivity
-more productivity=economic growth
Human Capital
-people are a country's most important resource
-education
-economic freedom
-incentives
-clean water
-stable food supply
Hindrances to growth
-economic and political stability
-absence of the rule of law
-diminished private property rights
-negative incentives
-lack of savings
excess current consumption
-failure to maintain existing capital
-crowding out of investment
I like how the flow chart shows the basis for how higher productivity ultimately leads to economic growth. More advanced technology is needed to create more productivity.
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