PHI 1101 Lecture Notes - Lecture 10: Government Budget Balance, Loanable Funds, Foreign Portfolio Investment

• School: University of Ottawa
• Department: Philosophy
• Course: PHI 1101
• Professor: Sardar Hosseini

Document Summary

Productivity depends on the amounts of physical capital, human capital, natural resources and technological knowledge available to workers. The more capital an economy has, the less additional output the economy gets from an extra unit of capital. Poor countries can grow faster because of the catch-up effect. Economists disagree on whether population growth is good or bad for the economy: more rapid population growth may lower productivity stretching the supply of natural resources and by reducing the amount of capital available for each worker. Contrary, a larger population may enhance the rate of technological progress because there are more scientists and engineers. Foreign direct investment is a capital investment that is owned and operated by a foreign entity. Foreign portfolio investment is an investment that is financed with foreign money but operated by domestic residents. Human capital has an opportunity cost of students in school missing out on the wages they could have earned, however human capital conveys positive externalities.