Economic Growth

by Weil, David N.

• ISBN13: 9780201680263
• ISBN10: 0201680262
• Format: Hardcover
• Copyright: 2009-01-01
• Publisher: Addison Wesley

Summary

Written by David N. Weil of Brown University, one of the top researchers in the field, this textbook is intended for undergraduate courses in economic growth, and it also will be of interest to instructors teaching courses on economic development and intermediate macroeconomics. In essence, the book examines the interesting question of why some countries are rich and some are poorwhy they differ in their levels of income and their rates of economic growth. The book is richly empirical and it features authoritative, up-to-date coverage reflecting the most important findings of contemporary research. Engagingly written, it presents a wealth of colorful examples, details, and anecdotes.

Table of Contents

PART I Overview	1	(46)
CHAPTER 1 The Facts to Be Explained	2	(26)
1.1 Differences in the Level of Income Among Countries	5	(4)
Box: Total GDP Versus GDP per Capita	7	(2)
1.2 Differences in the Rate of Income Growth Among Countries	9	(11)
Growth's Effect on the Level of Income	9	(4)
Box: Working with Growth Rohs	10	(3)
Growth During the Last 40 Years	13	(3)
Box: Growth Versus Business Cycles	14	(2)
Growth Since 1820	16	(1)
Growth Before 1820	16	(16)
Box: Income Inequality Between and Withing Countries	18	(2)
1.3 Conclusion	20	(4)
Appendix: Measuring and Comparing GDP Using Purchasing Power Parity	24	(4)
CHAPTER 2 A Framework for Analysis	28	(19)
2.1 The Economics of Sylvania and Freedonia: A Parable	29	(3)
2.2 From Parable to Practice	32	(5)
The Production Function	33	(2)
From Income Levels to Growth Rates	35	(2)
2.3 What Can We Learn from Data?	37	(4)
Scatter Plots and Correlations	38	(3)
2.4 Conclusion	41	(7)
Box: Learning from Historical Data	42	(5)
PART II Factor Accumulation	47	(134)
CHAPTER 3 Physical Capital	48	(35)
3.1 The Nature of Capital	50	(1)
3.2 Capital's Role in Production	51	(5)
Using a Production Function to Analyze Capital's Role	52	(2)
Factor Payments and Factor Shares	54	(2)
Box: Capital's Share of National Income	56	(1)
3.3 The Solow Model	56	(13)
Determination of Capital per Worker	57	(3)
Box: The Rise and Fall of Capital	58	(1)
Box: Measuring Change over Time	59	(1)
Steady States	60	(4)
Box: Steady Shate: A Non-economic Example	62	(2)
The Solow Model as a Theory of Income Differences	64	(3)
The Solow Model as a Theory of Relative Growth Rates	67	(2)
3.4 The Relationship Between Investment and Saving	69	(6)
Explaining the Saving Rate: Exogenous Versus Endogenous Factors	71	(1)
The Effect of Income on Saving	72	(3)
Box: Government Policy and the Saving Rate	73	(2)
3.5 Conclusion	75	(5)
Box: The Rise and Fall of Capital Revisited	76	(4)
Appendix: Further Exploration of the Cobb-Douglas Production Function and the Speed of Convergence in the Solow Model	80	(3)
CHAPTER 4 Population and Economic Growth	83	(41)
4.1 Population and Output over the Long Run	85	(9)
Population over the Long Run	85	(1)
The Malthusian Model	86	(7)
Box: The Power of Population	87	(6)
The Breakdown of the Malthusian Model	93	(1)
4.2 Population Growth in the Solow Model	94	(5)
Population Growth and Capital Dilution	95	(1)
A Quantitative Analysis	96	(3)
4.3 Explaining Population Growth	99	(8)
Mortality Transition	100	(2)
Explaining the Mortality Transition	102	(1)
Fertility Transition	102	(2)
The Interaction of Fertility and Mortality	104	(3)
4.4 Explaining the Fertility Transition	107	(8)
Reduced Fertility: The Means	107	(4)
Box: Family-Planning Programs and Their Effects	109	(2)
Reduced Fertility: The Motives	111	(15)
The Effect of Mortality Reduction	111	(1)
Income and Substitution Effects	112	(1)
Resource Flows Between Parents and Children	113	(1)
Quantity-Quality Trade-Offs	114	(1)
4.5 Conclusion	115	(4)
Appendix: A More Formal Description of the Total Fertility Rate, Life Expectancy, and Net Rate of Reproduction	119	(5)
CHAPTER 5 Future Population Trends	124	(29)
5.1 Forecasting Population	126	(12)
Forecasting Mortality	128	(1)
Box: AIDS in Africa	129	(1)
Forecasting Fertility	129	(1)
Fertility in the Rich Countries	130	(5)
Box: The Tempo Effect	132	(1)
Fertility in Poor Countries	133	(2)
Demographic Momentum	135	(1)
Population in the Very Long Run	136	(2)
Box: How Many People Can the Earth Support?	138	(1)
5.2 The Economic Consequences of Demographic Change	138	(11)
The Slowdown in Population Growth	139	(2)
Population Aging	141	(5)
Redrawing the World Map	146	(1)
Box: Going for the Gold	147	(2)
5.3 Conclusion	149	(4)
CHAPTER 6 Human Capital	153	(28)
6.1 Human Capital in the Form of Health	154	(7)
The Effect of Health Differences on Income	154	(3)
Modeling the Interaction of Health and Income	157	(4)
Box: Health and Income per Capita: Two Views	160	(1)
6.2 Human Capital in the Form of Education	161	(10)
Changes in the Level of Education 162 Education and Wages	163	(1)
Human Capital's Share of Wages	164	(7)
Box: The College Premium in. the United States	166	(5)
6.3 How Much of the Variation in Income Across Countries Does Education Explain?	171	(7)
A Quantitative Analysis of the Impact of Schooling Differences Among Countries	171	(7)
The Quality of Schooling	176	(1)
Externalities	176	(2)
6.4 Conclusion	178	(4)
Box: Human Perfectability and the Growth Slowdown	179	(2)
PART III Productivity	181	(150)
CHAPTER 7 Measuring Productivity	182	(23)
7.1 Productivity in the Production Function	183	(3)
7.2 Differences in the Level of Productivity Among Countries	186	(8)
Measuring Productivity Differences Among Countries	186	(6)
Box: Problems with Measuring Capital-and Their Implications for Measuring Productivity	191	(1)
The Contribution of Productivity to Income Differences Among Countries	192	(2)
7.3 Differences in the Growth Rate of Productivity Among Countries	194	(6)
Mathematical Extension: The Relative Importance of Productivity and Factor Accumulation	195	(1)
Measuring Countries' Productivity Growth	195	(2)
The Contribution of Productivity to Growth Differences Among Countries	197	(3)
7.4 Conclusion	200	(5)
Box: A Tale of Two Cities	201	(4)
CHAPTER 8 The Role of Technology, in Growth	205	(34)
8.1 The Nature of Technological Progress	206	(6)
Technology Creation	207	(1)
Transfer of Technology	208	(1)
Determinants of R and D Spending	209	(1)
Profit Considerations	209	(2)
Box: Patents, Trade Secrets, and the Terminator Gene	210	(1)
Creative Destruction	211	(1)
8.2 Modeling the Relationship Between Technology Creation and Growth	212	(13)
One-Country Model	212	(5)
Box: International Technology Transfer	216	(1)
Two-Country Model	217	(8)
8.3 Barriers to International Technology Transfer	225	(4)
Appropriate Technology	225	(3)
Tacit Knowledge	228	(1)
8.4 Conclusion	229	(5)
Box: Embodied Technological Progress and Leapfrogging	230	(4)
Mathematical Appendix: Incorporating Technological Progress into the Solow Model	234	(5)
CHAPTER 9 The Cutting Edge of Technology	239	(31)
9.1 The Pace-of Technological Change	240	(9)
Technological Progress Before the 18th Century	241	(3)
Box: Some Milestones of Technological Progress	242	(2)
The Industrial Revolution	244	(3)
Technological Progress Since the Industrial Revolution	247	(2)
9.2 The Technology Production Function	249	(8)
Box: General-Purpose Technologies	250	(2)
The Relationship Between Technology Level and the Speed of Technological Progress	252	(1)
Box: Science and Technology	253	(1)
Decreasing Returns to Scale in Technology Production	253	(1)
Implications for the Future of Technological Progress	254	(3)
Box: Where Is the Cutting Edge of Technology?	256	(1)
9.3 Differential Technological Progress	257	(7)
Box: Predicting Technological Progress	258	(2)
Differential Technological Progress: Two Theoretical Examples	260	(1)
Example 1: Bread and Cheese	260	(1)
Example 2: Butter and Margarine	261	(1)
Conclusions from the Examples	261	(1)
Technological Progress in the Real World: Goods Versus Services	262	(1)
Technological Progress in the Real World: Information Technology	263	(1)
9.4 Conclusion	264	(4)
Mathematical Appendix: An Improved Version of the Technology Production Function	268	(2)
CHAPTER 10 Efficiency	270	(29)
10.1 Decomposing Productivity into Technology and Efficiency	271	(4)
Analyzing Cross-Country Data	272	(3)
10.2 Differences in Efficiency: Case Studies	275	(6)
Central Planning in the Soviet Union	275	(2)
Textiles in 1910	277	(1)
Cross-Country Differences in Productivity by Industry	278	(2)
Subsurface Coal Mining in the United States, 1949-1994	280	(1)
10.3 Types of Inefficiency	281	(12)
Unproductive Activities	282	(1)
Idle Resources	283	(1)
Misallocation of Factors Among Sectors	284	(5)
Barriers to Mobility	287	(1)
Wages Not Equal to Marginal Product	287	(1)
Efficiency Gains from Sectoral Reallocation	288	(1)
Misallocation of Factors Among Firms	289	(1)
Technology Blocking	290	(3)
10.4 Conclusion	293	(4)
Mathematical Appendix: Sectoral Reallocation and the Growth Rate of Aggregate Productivity	297	(2)
Chapter 11 Growth in the Open Economy	299	(32)
11.1 Autarky Versus Openness	300	(7)
Measuring Output in an Open Economy	301	(1)
Globalization: The Facts	302	(1)
Globalization: The Causes	303	(4)
Transport Costs	304	(1)
Transmission of Information	305	(1)
Box: Tariffs, Quotas, and Other Trade Restrictions	306	(1)
Trade Policy	306	(1)
11.2 The Effect of Openness on Economic Growth	307	(5)
Growth in Open Versus Closed Economies	309	(1)
How Changes in Openness Affect Growth	310	(1)
The Effect of Geographical Barriers to Trade	311	(1)
11.3 Openness and Factor Accumulation	312	(5)
Growth with Capital Mobility	313	(2)
Assessing the Free-Capital-Flow Model	315	(2)
11.4 Openness and Productivity	317	(6)
Trade as a Form of Technology	317	(3)
Box: The Rise and Fall of Consolidated Alchemy	318	(2)
Openness and Technological Progress	320	(1)
Openness and Efficiency	321	(2)
11.5 Opposition to Openness	323	(5)
Box: Anti-Globalization	325	(3)
11.6 Conclusion	328	(3)
PART IV Fundamentals	331	(170)
CHAPTER 12 Government	332	(32)
12.1 Defining Government's Proper Role in the Economy	336	(3)
The Case for Government Intervention in the Economy	336	(1)
The Case Against Government Intervention in the Economy	337	(1)
Swings of the Pendulum	338	(1)
12.2 How Government Affects Growth	339	(9)
Rule of Law	339	(3)
Taxation, Efficiency, and the Size of Government	342	(3)
Planning and Other Industrial Policies	345	(3)
Box: The Other Path	346	(1)
Box: Planning Is Not Always a Failure	347	(1)
12.3 Why Governments Do Things That Are Bad for Growth	348	(6)
Some Other Goal	349	(1)
Corruption and Kleptocracy	349	(2)
Self-Preservation	351	(3)
Box: Government Regulation: Helping Hand or Grabbing Hand?	352	(2)
12.4 Why Poor Countries Have Bad Governments	354	(6)
Causation Running from Income to Government Quality	354	(2)
Causation Running from Government Quality to Income	356	(9)
Box: Democracy and Economic Growth	358	(2)
12.5 Conclusion	360	(4)
CHAPTER 13 Income Inequality	364	(36)
13.1 Income Inequality: The Facts	365	(9)
Using the Gini Coefficient to Measure Income Inequality	366	(3)
The Kuznets Hypothesis	369	(5)
Box: Is Growth Good for the Poor?	372	(2)
13.2 Sources of Income Inequality	374	(8)
Explaining the Recent Rise in Income Inequality	380	(2)
Technological Advances	380	(1)
Increases in International Trade	381	(1)
"Superstar" Dynamic	381	(1)
13.3 The Effect of Income Inequality on Economic Growth	382	(12)
Effect on the Accumulation of Physical Capital	382	(1)
Effect on the Accumulation of Human Capital	383	(3)
Income Inequality, Income Redistribution, and Efficiency	386	(4)
Sociopolitical Unrest in Response to Income Inequality	390	(1)
Empirical Evidence	391	(3)
13.4 Beyond Income Distribution: Economic Mobility	394	(3)
13.5 Conclusion	397	(3)
CHAPTER 14 Culture	400	(31)
14.1 The Effect of Culture on Economic Growth	401	(15)
Openness to New Ideas	402	(1)
Hard Work	403	(2)
Saving for the Future	405	(1)
Trust	406	(2)
Box: Pitfalls of Cultural Explanations for Economic Growth	407	(1)
Social Capital	408	(3)
Box: Importance of Social Capital at the Village Level	411	(1)
Social Capability	411	(5)
Box: Changes in Appropriate Culture	414	(2)
14.2 What Determines Culture?	416	(6)
Climate and Natural Resources	416	(1)
Cultural Homogeneity and Social Capital	417	(3)
Population Density and Social Capability	420	(2)
14.3 Cultural Change	422	(5)
Box: Determinants of Cooperation: An Experimental Approach	423	(1)
Economic Growth and Cultural Change	423	(2)
Government Policy and Cultural Change	425	(2)
14.4 Conclusion	427	(4)
CHAPTER 15 Geography, Climate and Natural Resources	431	(31)
15.1 Geography	432	(9)
Location, Trade, and Growth	433	(2)
Geographic Concentration and Spillovers	435	(6)
Box: Guns, Germs, and Geography	436	(2)
Geography's Effect on Government	438	(3)
15.2 Climate	441	(8)
Climate and Agricultural Productivity	443	(2)
Climate and Disease	445	(3)
Climate and Human Effort	448	(1)
15.3 Natural Resources	449	(8)
The Relationship Between Natural Resources and Growth	450	(2)
Explanations for the Resource Curse	452	(5)
Overconsumption	453	(1)
Dynamics of Industrialization	453	(2)
Politics	455	(2)
15.4 Conclusion	457	(5)
Box: Resources and Early Industrial Development: The Case of Coal	458	(4)
CHAPTER 16 Resources and the Environment at the Global Level	462	(39)
16.1 Natural Resource Concepts	463	(9)
Nonrenewable Resources	463	(3)
Renewable Resources	466	(2)
Property Rights over Resources	468	(2)
Resources and Production	470	(2)
16.2 Incorporating Natural Resources Into the Analysis of Economic Growth	472	(14)
Revising National Accounts	473	(1)
Box: Resource Disasters	474	(3)
Resource Prices	477	(4)
Box: The Bet	481	(1)
Why Resource Limitations Do Not Prevent Economic Growth	481	(5)
Substitution	482	(1)
Box: Resource-Saving Technologies	484	(1)
Technological Progress	485	(1)
16.3 Growth did the Environment	486	(9)
The Environmental Kuznets Curve 487 Global Warming	489	(1)
Box: The Environmental Kuznets Curve in London	490	(3)
Prediction of Future Warming	493	(1)
Must Prevention of Global Warming End Economic Growth?	494	(1)
16.4 Conclusion	495	(3)
Mathematical Appendix: Technological Improvement Versus Resource Depletion	498	(3)
PART V Conclusion	501	(12)
CHAPTER 17 What We Have Learned and Where We Are Headed	502	(11)
17.1 What We Have Learned	502	(4)
Factor Accumulation	503	(1)
Productivity	503	(2)
Technology	504	(1)
Efficiency	504	(1)
Fundamentals	505	(1)
17.2 What the Future Holds	506	(6)
What Will Happen to the World Income Distribution?	507	(1)
Will Technological Progress Continue Apace?	507	(4)
Box: Will Growth Make Us Happy?	508	(3)
What Is the Future of World Demographics?	511	(1)
Will Global Economic Integration Continue?	511	(1)
Will Shortages of Natural Resources Constrain Economic Growth?	512	(1)
17.3 A Final Thought	512	(1)
References	513	(14)
Glossary	527	(6)
Index	533	(14)
Credits	547