Unit VI: Economic Growth

Unit VI: Economic Growth & Productivity:

Economic Growth Defined:

·         Sustained increase in Real GDP over time.

·         Sustained increase in Real GDP per Capita over time.

·         Growth leads to greater prosperity for society.

·         Lessens the burden of scarcity.

·         Increases the general level of well-being.

Conditions of Economic Growth:

• Rule of Law
• Sound Legal and Economic Institutions
• Economic Freedom
• Respect for Private Property
• Political & Economic Stability
• Low Inflationary Expectations
• Willingness to sacrifice current consumption in order to grow
• Saving
• Trade

Human Capital:

·         People are a country’s most important resource. Therefore human capital must be developed.

·         Education

·         Economic Freedom

·         The right to acquire private property

·         Incentives

·         Clean Water

·         Stable Food Supply

·         Access to technology