Economic growth in a more integrated world
Download
Sponsored Links
This presentation is the property of its rightful owner.
1 / 17

Economic Growth in a More Integrated World PowerPoint PPT Presentation


  • 159 Views
  • Uploaded on
  • Presentation posted in: General

Economic Growth in a More Integrated World. What is economic growth? Sources of economic growth Factor movement Labor Movements Capital Movements Multinational Corporations . Economic Growth.

Download Presentation

Economic Growth in a More Integrated World

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Economic growth in a more integrated world

Economic Growth in a More Integrated World

  • What is economic growth?

  • Sources of economic growth

  • Factor movement

    • Labor Movements

    • Capital Movements

  • Multinational Corporations


  • Economic growth

    Economic Growth

    • Economic growth refers to an increase in the real output of the economy: An outward shift of the production possibilities frontier

    • Sources of economic growth:

      • Increases in the quantities of resources

      • Technological progress

  • Exogenous and endogenous sources of growth

  • The income effect of economic growth


  • Trade and economic growth

    Trade and Economic Growth

    • Does (international) trade contribute to economic growth?

    • Economic growth and terms of trade

    • The challenges developing countries face in increasingly globalized economy

      • Inadequate savings/investments

      • Rapid population growth and relatively small labor force

      • Deteriorating terms of trade

      • Weak “institutions” (economic, political, social)

      • And AIDS


    The world bank s classification of the nation states gdp per capita by country group 2000

    The World Bank’s Classification of the Nation States$GDP PER CAPITA BY COUNTRY GROUP2000

    • Low Income 426

    • Lower Middle 1,146

    • Upper Middle 4,900

    • High Income 27,609

    • Middle East and N.Afc 2,235


    Economic growth in a more integrated world

    Source: The World Bank


    Economic growth in a more integrated world

    Source: World Bank


    The structural differences

    The structural differences:

    • Labor:

      Labor force participation

      Female labor force participation

      Skilled and semiskilled labor

    • Capital:

      Physical capital

      Human capital

      Infrastructure

      Physical infrastructure

      Institutional infrastructure

      Social/Cultural infrastructure

    • Capital Stock and Labor Productivity


    Balanced growth more inputs

    Balanced Growth: More Inputs

    • Balanced growth: Proportional increases in labor and capital

    Food

    C1

    U1

    Co

    P1

    Uo

    Po

    Cloth

    o


    Will balanced growth necessarily increase welfare

    Will balanced growth necessarily increase welfare?

    • Population increase vs. labor force increase

    • The effect of growth on terms of trade

      • The small country case

      • The large country case

      • When a number of small countries exporting the same product grow simultaneously


    Growth effects

    Growth Effects

    • Income Effect

    • Price or Terms-of-trade effect

    • Effects on trading partner

    • Trade effect

    • Production effects

      • In the case resource growth

      • In the case technological progress


    Growth and terms of trade

    Growth and Terms of Trade

    (Immiserizing Growth)

    F

    Uo

    U2

    TT: (Pc/Pf)

    U1

    TT’: (Pc/Pf)’

    P2

    (Pc/Pf) > (Pc/Pf)’

    P1

    Po

    TT’

    TT

    TT

    C

    o


    Growth and terms of trade1

    Growth and Terms of Trade

    F

    U2

    TT: Pc/Pf

    TT’: (Pc/Pf)’

    (Pc/Pf) > (Pc/Pf)’

    U1

    Uo

    P2

    P1

    Po

    TT’

    TT

    TT

    o

    C


    Factor mobility

    Factor Mobility

    • Recall factor price equalization theorem

    • Labor mobility: migration/immigration

    • Capital mobility:

      • Portfolio investments

      • Direct investments

      • Multinational corporations

        Horizontal MNEs

        Vertical MNEs

        Conglomerates


    A simple model

    A Simple Model

    Wa

    Wb

    S

    S’

    Tax

    wao

    Wb1

    Wb1

    wbo

    D:VMPLb

    D’:

    VMPLa(1-t)

    D:VMPLa

    Ob

    Oa

    Total Labor


    A simple model1

    A Simple Model

    rb

    ra

    S

    S’

    rao

    rb1

    ra1

    rbo

    D:VMPKb

    D:VMPKa

    Ob

    Oa

    Total Capital


    Multinational enterprises

    Multinational Enterprises

    An MNE is a firm that owns, controls and manages production or service facilities in two or more countries

    • Horizontally integrated MNEs

    • Vertically integrated MNEs

    • Conglomerates

  • Capital arbitrage

  • The location theory

  • Bypassing trade barriers: R&Ds and FDIs

    • Are MNEs substitutes or complements to trade?

    • Do MNEs facilitate transfer of technology?

    • Do MNEs exploit and abuse their host countries?

      MNEs and Economic Development

  • Saving, investment and economic growth


  • Login