ECO 1102 Lecture Notes - Lecture 8: Foreign Portfolio Investment, Diminishing Returns, High Standard Manufacturing Company

• School: University of Ottawa
• Department: Economics
• Course: ECO 1102
• Professor: Octavian Strimbu

Document Summary

Data on real gdp per person show that living standards vary widely from country to country. Income per person in canada is about: 6 times higher than that of china, 12 times higher than that of india. Explaining the large variation in living standards around the world is, in one sense, very easy. As we will see, the explanation can be summarized in a single word: productivity. Productivity: the quantity of goods and services produced from each hour of a worker"s time. Productivity is the key determinant of living standards. Growth in productivity is the key determinant of growth in living standards. For a country to enjoy a high standard of living, it must produce a large quantity of goods and services. Physical capital: the stock of equipment and structures that are used to produce goods and services. Human capital: the knowledge and skills that workers acquire through education, training, and experience.