macro ch 7
on-the-job training
skills that workers acquire while at work rather than in school or in the formal vocational training programs
Identify the main reason to expect convergence in the long run.
Low-productivity countries learning from high-productivity countries
What makes up technological change?
capital education research & development
Human capital differs from physical capital in that
human capital is intangible.
What is capital a result of?
its the result of past decisions to make investments in these items
property rights
laws and or conventions that assign owners the rights to use their property as they see fit within the law
Compared to workers in richer countries, workers in developing countries have
lower productivity and lower wages.
cost disease of the personal services
service activities that require direct personal contact tend to rise in price relative to other goods and services
The definition of human capital refers to
worker education and worker training.
What helps in developmental assistance?
world bank IMF multinational corporations foreign direct investments
What are the 3 pillars of growth?
1) capital (physical) 2) technology 3) labor quality- education/training (human capital)
Which of the following is an explanation for why some poor countries suffer from lower productivity growth?
Poor countries have lower capital stocks.
What determines the productivity growth rates of a country?
Rates of increase of capital, technology, and workforce quality
capital
a nations available supply of plant, equipment, and software
invention
act of discovering new products or new ways of making products
innovation
act of putting new ideas into effect, like bringing new products to market, changing product designs, and improving the way in which things are done
human capital
amount of skill embodied in the workforce
Which of the following would tend to shift the production function upward?
an increase in the level of technology.
The shrinking gap between the income levels of poor and rich countries is known as the
convergence hypothesis.
In general, as productivity levels increase, the potential for productivity growth
decreases.
growth rate of productivity
depends on rate of increase in physical/human capital and technology
A productivity decrease would be illustrated by a shift in the production function
downward.
investment
flow of resources into the production of new capital. the labor, steel, and other inputs devoted to the construction of factories, warehouses, railroads, and other pieces of capital during some period of time
What is the nickname for development assistance
foreign aid
multinational corporations
generally large corporations that do business in many countries
Which of the following are problems that may limit economic growth in developing countries?
geography, health, & governance.
convergence hypothesis
holds that nations with low levels of productivity tend to have high productivity growth rates, so that international productivity differences shrink over time
Where are most multinational corporations' head quarters located?
in developed countries
What is capital formation synonymous with?
investment
How can capital grow?
investment government
The phrase "capital formation" is synonymous with
investment spending.
capital formation
process of building up the capital stock
More education and training usually lead to higher levels of
productivity.
Laws that assign owners the rights to use assets as they see fit are called
property rights.
foreign direct investment
purchase or reconstruction of real business assets- such as factories, offices, or machinery- in a foreign country
Which of the following is not one of the three pillars of productivity growth?
rate of capacity utilization.
How can government grow capital?
real rate of interest taxation (provisions) changes in technology growth in demand political stability/property rights
research and development (R&D)
refers to the activities aimed at inventing new products or processes, or improving new ones
development assistance
refers to the outright grants and low-interest loans to poor countries from both rich countries and multinational institutions like the world bank
What is an example of property rights?
to sell the property or rent it out, or dividends while they own it
What is the purpose of development assistance?
to spur economic development
