ECON3109 Study Guide - Final Guide: Diminishing Returns, Real Estate Development, Structural Change
Document Summary
Development is the process of expanding the real freedom that people enjoy, with expansions of freedom view as the primary end and the principle means of development . Core values: life sustenance: provision of basic needs, self esteem: self respect and independence, freedom: freedom of wants, ignorance and squalor. Constant returns to scale, diminishing returns to factors and unitary elasticity of substitution. Investment in new capital and the growth of population cannot lead to continued growth in per capita income attributed growth to the invention of new technologies. Implies countries converge to steady gdp per working. If countries have some steady states, poorer countries grow faster and converge: with the same saving rate and population growth rate countries with lower capital stock should grow faster. Low levels of capital accumulation: physical capital, human capital, social capital, lower levels of capital accumulation of any type cause low levels of production and poverty but also caused by them.
