ECON 010 Lecture Notes - Lecture 22: Foreign Portfolio Investment, Technological Change, Human Capital
ECON010 Ch22: LR Economic Growth
Economic growth model: explains growth rates in real GDP per capita over long run
Labor productivity: quantity of goods/services that can be produced by one worker or by
one hr of work
Technological change: change in quantity of output a firm can produce using given
quantity of inputs
Human capital: accumulated knowledge and skills that workers acquire from education
and training or from life experiences
Per worker production function: relationship btwn real GDP per hr worked and capital
per hr worked, holding level of technology constant
Net growth theory: model of long-run economic growth emphasizing technological change
influenced by economic incentives and so is determined by working of market system
Catch up: prediction that level of GDP per capita (or income per capita) in poor countries
will grow faster than rich countries
Rule of law: ability of gov to enforce laws of country, particularly with respect to
protecting private property and enforcing contracts
Foreign direct investment: purchase or building by corporation of a facility in a foreign
country
Foreign portfolio investment: purchase by individual or firm of stocks or bonds issued in
another country
Globalization: process of countries becoming more open to foreign trade and investment
Labor productivity factors: quantity of capital per hr worked and level of technology (more
important)
Sources of technological change: better machinery and equipment; increase in human
capital; better means of organizing/managing production
Holding technology constant, equal increases in amount of capital per hr worked leads to
diminishing increases in output her hr worked
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Document Summary
Economic growth model: explains growth rates in real gdp per capita over long run. Labor productivity: quantity of goods/services that can be produced by one worker or by one hr of work. Technological change: change in quantity of output a firm can produce using given quantity of inputs. Human capital: accumulated knowledge and skills that workers acquire from education and training or from life experiences. Per worker production function: relationship btwn real gdp per hr worked and capital per hr worked, holding level of technology constant. Net growth theory: model of long-run economic growth emphasizing technological change influenced by economic incentives and so is determined by working of market system. Catch up: prediction that level of gdp per capita (or income per capita) in poor countries will grow faster than rich countries. Rule of law: ability of gov to enforce laws of country, particularly with respect to protecting private property and enforcing contracts.
