Economic growth and productivity

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 for 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

  

Physical Capital

•Tools, machinery, factories, infrastructure

•Physical Capital is the product of Investment.

•Investment is sensitive to interest rates and expected rates of return.

•It takes capital to make capital.

•Capital must be maintained.

 

Technology and productivity 

•Research and development, innovation and invention yield increases in available technology.

•More technology in the hands of workers increases productivity.

•Productivity is output per worker.

•More Productivity = Economic Growth.

  

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