ECONOMIC GROWTH AND RISING LIVING STANDARD

2. -Refers to the rise in the standard of living in
a country.
REAL GROSS DOMESTIC PRODUCT PER
CAPITA (REAL GDP)
- Way to measure a nations standard of living.
Real GDP
Population

3. 1. The amount of output the average worker
product in an hour
2. The number of hours the average worker
spends at the job
3. The fraction of the population that is working
4. The size of the population

4. The amount of output the average worker products
in an hour
Productivity=Output per hour =
Total Output
Total hours worked
Average Hours =

5. The employment - Population ratio (EPR)
COMBINING THE DETERMINANTS
EPR=
Total employment
Population
Total Output
Total hours
Total hours
Total employment
Total employment
Population
X Population =
Total Output
Total Hours
Total Hours
Total employment

6. THE GROWTH EQUATION
Total employment
Population
Population
= Total Output (Real GDP)
= Productivity X Average hours X EPR X Population
Or Real GDP per capita= Productivity X Average Hours X EPR
Real GDP= Productivity X Average Hours X EPR X Population

7. With a given population, greater total
employment means an increase in EPR and a rise in real
GDP per capita.
POSSIBLITIES THAT CAUSES TOTAL EMPLOYMENT
TO RISE.
1. Changes in Labor Supply
2. Changes in Labor Demand

8.  Capital per worker =
Investment and the capital stock
 Capital – is a stock variable
 Investment spending – flow variable
 Depreciation- another flow variable
Total capital stock
Total Employment

9. 1. Targeting Business: Increasing the incentive to invest
• Corporate profit tax
• Investment tax credit
2. Targeting households: Increasing the incentive to
save
• Capital gainszs tax
• Consumption tax
3. Shrinking the Budget Deficit

12. Productivity growth
- means that the average worker is producing
more per hour
Technological Change
- new production methods.

13. Discovery- Based Growth
Government and Discovery- Based Growth
Research and Development Spending
Institutional Infrastructure and Innovation

14. BBB PROGRAM
Clark International Airport
Expansion Phase 1 Subic-Clark Railway Project

15. Public-Private Partnership (PPP)

16. CEBU-CORDOVA BRIDGE

17.  Catch-Up Growth
 Government and Catch-Up Growth
Growth Policies: A Summary
Fiscal policy
Multiple and Competing Effects

19. The Cost of Economic Growth
• Budgetary Costs
• Consumption Costs
• Sacrifice of Other Social Goals
Barriers to Catch-Up Growth in the Poorest
Countries
These countries seem to have three main problems
in common:
1. Extremely low output per capita.
2. High population growth rates.
3. Poor institutions.

20. Extremely low output per capita.

21. High population growth rates

22. Poor institutions