Alright. So let's continue our discussion here with the catch-up effect of the per worker production function, right? So remember, catch-up is where poor countries can grow faster than rich countries because of the diminishing returns to physical capital. Investments in a poor country are going to end up making a lot more output than an investment in an already rich country. So does catch-up actually occur? We've talked about it in theory. Does it actually occur? We see that for the most part, yes, it does occur. It does for the most part occur, but obviously, there are going to be outliers, some things, there are kinks that get thrown into the mix, but we've been tracking GDP growth for a long time and we've seen that since 1960. There have been countries with slower economic growth although they still are growing at 2% to 3% which is what we would expect from a developed country. We observed this kind of growth in countries like the United States, Switzerland, and Australia. Countries that are technically considered developed. So these are countries that start out rich and they didn't grow as much as, say, some of these developing countries. So another word for developed countries, sometimes we see the term leader countries, and that's just a developed country. It's just another term, interchangeable; leader country, developed country, and what they've noticed from these studies is that their growth is dependent on new technology. So, for the most part, their growth is going to be pretty stagnant except when new technology changes the market, and all sorts of new industries emerge. So, with the introduction of the internet, cell phones, right? All sorts of big advancements in society that is what spawns economic growth in developed countries because, for the most part, all of their industries are grown, right? They've got big industries in all segments and then all of a sudden there's a new technology that changes the market, there's all sorts of new jobs available, and all sorts of growth happens. So, in the leader countries, we see growth around averaging 2% to 3%. Whereas we notice that, in what we're saying is, higher economic growth, so countries with higher economic growth, it's only 4% to 6%. It doesn't sound like that much more, but on a grand scale, 4% to 6% growth for an economy is actually really big and in other videos, we talk about how growth rates work and how basically they compound on each other and 4 to 6% growth compounds actually pretty quickly. This is what we would expect more from a developing country. A developing country would have this higher economic growth of about 4 to 6% and this is growth in GDP that we're talking about. Notice what kind of countries have experienced this growth. Taiwan, Korea, Hong Kong, China. All countries that have become a lot more relevant and have grown a lot more in the economic sense, and this has been since 1960, so those countries have all had a lot of growth over those years and they've become big-time competitors in the worldwide economic scene, right? Another term just like we had leader countries for developed countries, well, we have what's called follower countries for the developing countries. This is just other terms that are used and that you should just be aware of just in case you see it on a test they use follower country instead of developing. You never know. So it's just good to know that there are different terms there and what we see is that these follower countries, why they're called follower countries is because, let's say in the USA, they develop the Internet. Well then, in the follower countries, they can just adopt the new technology and there was actually it's actually been seen in Africa where the U.S. Has had telephones for you know over 100 years and they've spent tons of money on infrastructure for landlines because back in the day, right? Everyone had a phone in their house plugged into the wall and they had all this infrastructure throughout the U.S. to be able to have these landlines in everyone's house. However, there are countries in Africa that just skip that step altogether. They have cell phones now where they don't need all this infrastructure to have lines in everyone's house. Everyone just has a cell phone and they don't have all that infrastructure. So, you could technically say that they didn't waste their money on that landline infrastructure and they just build some cell phone towers and now they have telephone service just like we have here in the US, right? So they're able to adopt the new technologies and sometimes forego, you know, middle steps that were let's say less productive, right? And it allows them to grow faster from having no phones at all to now everyone having a cell phone, right? That's a big growth factor there. Now, there were some countries that didn't fit the model that actually had negative growth. Negative growth here and that was countries, like Niger and the Democratic Republic of Congo. They both showed an average negative growth rate over the years. Now, they've been, a lot of countries in Africa have been, you know, had constant turmoil. There's a lot of corruption in the government. There are a lot of wars, civil wars that happen and a lot of struggles that just don't help the economic factors, right? And we don't see economic growth, so when there's a lot of conflicts in government, well then, there's going to be trouble stabilizing and being able to grow, the economy. Okay? So let's pause real quick and then we're going to talk about one more thing with the per worker production function, and then we'll move on to a new topic. Alright? Let's do that in the next.
Table of contents
- 1. Introduction to Macroeconomics1h 57m
- 2. Introductory Economic Models59m
- 3. Supply and Demand3h 43m
- Introduction to Supply and Demand10m
- The Basics of Demand7m
- Individual Demand and Market Demand6m
- Shifting Demand44m
- The Basics of Supply3m
- Individual Supply and Market Supply6m
- Shifting Supply28m
- Big Daddy Shift Summary8m
- Supply and Demand Together: Equilibrium, Shortage, and Surplus10m
- Supply and Demand Together: One-sided Shifts22m
- Supply and Demand Together: Both Shift34m
- Supply and Demand: Quantitative Analysis40m
- 4. Elasticity2h 26m
- Percentage Change and Price Elasticity of Demand19m
- Elasticity and the Midpoint Method20m
- Price Elasticity of Demand on a Graph11m
- Determinants of Price Elasticity of Demand6m
- Total Revenue Test13m
- Total Revenue Along a Linear Demand Curve14m
- Income Elasticity of Demand23m
- Cross-Price Elasticity of Demand11m
- Price Elasticity of Supply12m
- Price Elasticity of Supply on a Graph3m
- Elasticity Summary9m
- 5. Consumer and Producer Surplus; Price Ceilings and Price Floors3h 40m
- Consumer Surplus and WIllingness to Pay33m
- Producer Surplus and Willingness to Sell26m
- Economic Surplus and Efficiency18m
- Quantitative Analysis of Consumer and Producer Surplus at Equilibrium28m
- Price Ceilings, Price Floors, and Black Markets38m
- Quantitative Analysis of Price Ceilings and Floors: Finding Points20m
- Quantitative Analysis of Price Ceilings and Floors: Finding Areas54m
- 6. Introduction to Taxes1h 25m
- 7. Externalities1h 3m
- 8. The Types of Goods1h 13m
- 9. International Trade1h 16m
- 10. Introducing Economic Concepts49m
- Introducing Concepts - Business Cycle7m
- Introducing Concepts - Nominal GDP and Real GDP12m
- Introducing Concepts - Unemployment and Inflation3m
- Introducing Concepts - Economic Growth6m
- Introducing Concepts - Savings and Investment5m
- Introducing Concepts - Trade Deficit and Surplus6m
- Introducing Concepts - Monetary Policy and Fiscal Policy7m
- 11. Gross Domestic Product (GDP) and Consumer Price Index (CPI)1h 37m
- Calculating GDP11m
- Detailed Explanation of GDP Components9m
- Value Added Method for Measuring GDP1m
- Nominal GDP and Real GDP22m
- Shortcomings of GDP8m
- Calculating GDP Using the Income Approach10m
- Other Measures of Total Production and Total Income5m
- Consumer Price Index (CPI)13m
- Using CPI to Adjust for Inflation7m
- Problems with the Consumer Price Index (CPI)6m
- 12. Unemployment and Inflation1h 22m
- Labor Force and Unemployment9m
- Types of Unemployment12m
- Labor Unions and Collective Bargaining6m
- Unemployment: Minimum Wage Laws and Efficiency Wages7m
- Unemployment Trends7m
- Nominal Interest, Real Interest, and the Fisher Equation10m
- Nominal Income and Real Income12m
- Who is Affected by Inflation?5m
- Demand-Pull and Cost-Push Inflation6m
- Costs of Inflation: Shoe-leather Costs and Menu Costs4m
- 13. Productivity and Economic Growth1h 17m
- 14. The Financial System1h 37m
- 15. Income and Consumption52m
- 16. Deriving the Aggregate Expenditures Model1h 22m
- 17. Aggregate Demand and Aggregate Supply Analysis1h 18m
- 18. The Monetary System1h 1m
- The Functions of Money; The Kinds of Money8m
- Defining the Money Supply: M1 and M24m
- Required Reserves and the Deposit Multiplier8m
- Introduction to the Federal Reserve8m
- The Federal Reserve and the Money Supply11m
- History of the US Banking System9m
- The Financial Crisis of 2007-2009 (The Great Recession)10m
- 19. Monetary Policy1h 32m
- 20. Fiscal Policy1h 0m
- 21. Revisiting Inflation, Unemployment, and Policy46m
- 22. Balance of Payments30m
- 23. Exchange Rates1h 16m
- Exchange Rates: Introduction14m
- Exchange Rates: Nominal and Real13m
- Exchange Rates: Equilibrium6m
- Exchange Rates: Shifts in Supply and Demand11m
- Exchange Rates and Net Exports6m
- Exchange Rates: Fixed, Flexible, and Managed Float5m
- Exchange Rates: Purchasing Power Parity7m
- The Gold Standard4m
- The Bretton Woods System6m
- 24. Macroeconomic Schools of Thought40m
- 25. Dynamic AD/AS Model35m
- 26. Special Topics11m
13. Productivity and Economic Growth
Productivity and the Per-Worker Production Function
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