Matakuliah
Tahun
: J0114-Teori Ekonomi
: 2009
ECONOMIC GROWTH
Pertemuan 13
Ingredients of Growth
• Supply Factors
Increases in Quantity and Quality of
Natural Resources
Increases in Quality and Quantity of
Human Resources
Increases in the Supply (or Stock) of
Capital Goods
Improvements in Technology
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3
Ingredients of Growth
• Demand Factor
– Households, Businesses, And
Government Must Purchase the
Economy’s Expanding Output of Goods
and Services
• Efficiency Factor
– Must Achieve Economic Efficiency and
Full Employment
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4
Production Possibilities
Production Possibilities Curve
Capital Goods
C
A
Economic
Growth
c
b
a
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B
D
Consumer Goods
5
Labor and Productivity
Real GDP = Hours of Work x Labor Productivity
• Size of
Employed
Labor Force
• Average
Hours of
Work
• Technological
Advance
• Quantity of
Capital
• Education and
Training
• Allocative
Efficiency
• Other
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Labor
Inputs
(Hours of
Work)
Real
GDP
Labor
Productivity
(Average
Output per
Hour)
6
Growth in the AD-AS Model
Production Possibilities and Aggregate Supply
ASLR1 ASLR2
Capital Goods
C
Price Level
A
B
D
Consumer Goods
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Real GDP
7
Growth in the AD-AS Model
Production Possibilities and Aggregate Supply
Depicting U.S. Growth with AD-AS Model
ASLR2
ASLR1
AS2
Price Level
AS1
P2
P1
AD2
AD1
Q1
Q2
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Real GDP
Accounting for Growth
O 16.1
• Growth Accounting
• U.S. Economic Growth Rates
U.S. Economic Growth, Annual Averages for Five Decades
Average Annual Increase (Percent)
5
Real GDP
Real GDP Per Capita
4
3
2
1
0
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1950-1959
1960-1969
1970-1979
Year
1980-1989
1990-1999
2000-2005
Source: Bureau of Economic Analysis
9
Accounting for Growth
• Factors Underlying Growth
– Increases in Hours of Work
– Increases in Labor Productivity
Accounting for Growth of U.S. Real GDP, 1953-2011
(Annual Percentage Changes)
Item
Increases in Real GDP
Increases in
Quantity of Labor
Increases in
Labor Productivity
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*Beyond 2005 are Projections
1953 Q2
to
1973 Q4
1973 Q4
to
1995 Q2
1995 Q2
to
2001 Q1
2001 Q1
to
2005 Q3
2005 Q3
to
2011 Q4*
3.6
2.8
3.8
2.8
3.2
1.2
1.5
1.7
-0.6
0.8
2.4
1.3
2.1
3.4
2.4
10
Source: Economic Report of the President, 2006
Accounting for Growth
• Technological Advance
• Quantity of Capital
– Infrastructure
• Education and Training
– Human Capital
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Percent of Adult Population
Changes in the Educational Attainment of the U.S. Adult Population
100
80
60
40
20
0
1960
1970
1980
Year
1990
2000
2005
11
Source: U.S. Census Bureau
Accounting for Growth
• Economies of Scale
• Improved Resource Allocation
• Other Factors
–
–
–
–
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Economic Freedom
Political Freedom
“Growth Friendly”
Positive Attitudes Toward Work and Risk
Taking
12
A New Economy?
• Productivity Acceleration
– 1.4% Average Growth 1973-1995
– 2.9% Average Growth 1995-2004
• Reasons for Acceleration
– The Microchip and Information Technology
– New Firms and Increasing Returns
• Start-Up Firms
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A New Economy?
• Increasing Returns
–
–
–
–
–
More Specialized Inputs
Spreading of Development Costs
Simultaneous Consumption
Network Effects
Learning by Doing
• Global Competition
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A New Economy?
• Implication: More Rapid Growth
• Skepticism About Permanence
• What Can We Conclude?
– More Rapid Long-Run Trend of
Productivity Growth
– Time Will Tell If Growth is Sustainable
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A New Economy?
GLOBAL PERSPECTIVE
Growth Competitiveness Index
Country
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Finland
United States
Sweden
Denmark
Taiwan
Singapore
Iceland
Switzerland
Norway
Australia
Ranking
1
2
3
4
5
6
7
8
9
10
Source: World Economic Forum
16
Growth Desirability
• Is Growth Desirable and Sustainable?
• The Antigrowth View
– Adverse Spillovers
– Alternative Quality of Life Opinions
• In Defense of Economic Growth
– Higher Standard of Living
– Poverty Reduction
– Limited Only by Human Imagination
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