More Economically Developed Countries - MEDC

ECONOMIC GROWTH

Why is economic growth important?  Results in rising wages and higher standards of living for citizens (measured as increases in real gross domestic product (GDP) per capita). Economic growth allows a society to increase its consumption of goods and services.

Describe the difference between economic expansion and long-run economic growth.  Economic expansion – increasing the pace of economic activity to move an economy back toward its potential. (i.e. economy recovers from an economic downturn)  Long Run Economic Growth is an increase in an economy’s productive capacity.

Describe the difference between growth that occurs as a result of an increase in inputs and growth that occurs as a result of an increase in output per input.  Acquisition of more resources/inputs, more goods and services can be produced.  Existing resources/inputs are used more efficiency, which increases output per input, or productivity.

What indicators and models can we use to evaluate economic growth and the standard of living in different countries?  Indicators – Real GDP per capita, Output Gap, Total Productivity, Capacity Utiliziation  Long Run Aggregate Supply, Production Possibility Frontier

Compare the Characteristics of a More Economically Developed Country and Less Developed Country. MDC LDC  High Standard of Living  Low Standards of Living  Strong high-technology diversified economy  High Income Inequality  High per capita GDP  Poor Health Care  Industrialized  Inadequate Education  Some combination of Representative Government  Limited Life Expectancy  Free Market Economic Model  Low levels of Productivity  General lack of corruption  High Population Growth Rates (Dependency  Source of Wealth: Imperialism, Colonialism, Burdens) Globalization, Productivity  Unemployment, Underemployment  Examples (Japan, Canada, US, Australia, New  Small Industrial Sector, Outdated Technology Zealand, Europe, South Africa and Israel.  Migration from Rural to Urban  Lack of financial markets  Colonial Past  Limited Technology, Infrastructure, and Social/Political Institutions  Examples (South America, Africa, Middle East, and Southeast Asia) With most countries not being fully developed, and considered an LDC, what aspects allow for a higher level of development (i.e. China and Haiti)?  Resource Endowment  Geography, Climate  Language and Religion  Extent of Education  Size of Private Sector  Role of Government  Culture

RICH NATION/POOR NATION

You are secret agents assigned to find out if a country is rich or poor. From the information provided below, identify each of the five countries listed. Jot down the country’s name opposite each bold-face heading. Rank the five countries you have identified in order, with the richest country placed “1” and the poorest country at “5.”

Country A:__Argentina______Rank:_3__ Country B:____Japan______Rank: __2_

Size: Three-tenths the size of the United States Size: About the size of California

Population: 40,301,927 Population: 127,433,494

Natural Resources: Rich resources with fertile land and Natural Resources: Fish, no mineral resources minerals such as lead, zinc, tin, copper, iron ore, oil, and uranium.

Country C:__Nigeria______Rank:_5__ Country D:___Russia______Rank:__4_

Size: Twice the size of California Size: 1.8 times the size of the United States

Population: Large population of 135,031,164 Population: 141,377,752

Natural Resources: Vast resources including oil, tin, iron ore, Natural Resources: Vast resources with major deposits of oil, coal, limestone, lead, zinc and natural gas. natural gas, coal, many strategic minerals, vast timber supplies.

Country E:___Singapore______Rank:_1__

Size: 3.5 times larger than Washington D.C.

Population: 4,553,009

Natural Resources: Fish, deepwater port What are the factors contributing to Long-Term Economic Growth? 1. High Investment in Human and Physical Capital  Higher productivity i. Capital per worker – better tools to work with and infrastructure ii. Human capital per worker – Collective experience and education iii. Natural Resource per worker – Minerals, Energy, Rivers, Trees, and Fisheries iv. Technology – the way resources are combined to produce  Foreign Direct Investment – capital investment owned and operated by a foreign entity  Foreign Portfolio Investment – capital investment is financed with foreign money, but operate by domestic residents 2. Economic Freedom  Lower Taxes and Decrease Government Regulation  Sound Monetary Policy and Financial System  Property Rights  Decentralized Decision Making  Economic Enterprise 3. Strong incentives to save, invest, and increase productivity 4. Property Rights – strong property rights ensure that private investment and innovation are properly rewarded, which provides the incentive for future productive economic activity 5. Competitive Markets – competitive markets and flexible prices ensure that markets can adjust, and free trade opens industries to additional competition, which leads to increases in efficiency and productivity. 6. Efficient Financial Institutions – transform the deposits of savers into loans for borrowers, which are used to invest in capital, technology, and infrastructure – all key ingredients for growth. Research finds that countries with well-developed financial markets allocate resources more effectively, a key to economic growth. 7. Other Factors – Low inflation, political stability, free trade, health/nutrition, research/development, population growth. Goal:

Focus on attainment:

Short term changes:

How will these changes lead to success in reaching goal? ECONOMIC GROWTH

Why is economic growth important?

Describe the difference between economic expansion and long-run economic growth.

Describe the difference between growth that occurs as a result of an increase in inputs and growth that occurs as a result of an increase in output per input.

What indicators and models can we use to evaluate economic growth and the standard of living in different countries?

Compare the Characteristics of a More Economically Developed Country and Less Developed Country. MDC LDC

With most countries not being fully developed, and considered an LDC, what aspects allow for a higher level of development (i.e. China and Haiti)? RICH NATION/POOR NATION

You are secret agents assigned to find out if a country is rich or poor. From the information provided below, identify each of the five countries listed. Jot down the country’s name opposite each bold-face heading. Rank the five countries you have identified in order, with the richest country placed “1” and the poorest country at “5.”

Country A:______Rank:____ Country B:______Rank: ____

Size: Three-tenths the size of the United States Size: About the size of California

Population: 40,301,927 Population: 127,433,494

Natural Resources: Rich resources with fertile land and Natural Resources: Fish, no mineral resources minerals such as lead, zinc, tin, copper, iron ore, oil, and uranium.

Country C:______Rank:____ Country D:______Rank:____

Size: Twice the size of California Size: 1.8 times the size of the United States

Population: Large population of 135,031,164 Population: 141,377,752

Natural Resources: Vast resources including oil, tin, iron ore, Natural Resources: Vast resources with major deposits of oil, coal, limestone, lead, zinc and natural gas. natural gas, coal, many strategic minerals, vast timber supplies.

Country E:______Rank:____

Size: 3.5 times larger than Washington D.C.

Population: 4,553,009

Natural Resources: Fish, deepwater port

What are the factors contributing to Long-Term Economic Growth? Goal:

Focus on attainment:

Short term changes:

How will these changes lead to success in reaching goal?