3/17/2022

ECONOMIC GROWTH MODELS

Dr. Iftikhar Yasin

Department of Economics
The University of Lahore

Copyright © 2010 Worth Publishers

1.1 The Importance of Growth

1.2 The World Income Distribution

Economic Growth Models 1.3 Empirical Regularities About

Economic Growth
Marks Distribution and readings

1.1
The Importance of Economic Growth

What is GDP per Capita ?

1870 2000 Growth Rate

United States $3,340 $33,330 1.8 %

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1.1
The Importance of Economic Growth

US GDP Per Capita

1870 2000 Growth Rate

United States $3,340 $9,450 0.8 %

India: 0.64%
Pakistan: 0.88%
Philippines: 0.86%

1.1
The Importance of Economic Growth

US GDP Per Capita

1870 2000 Growth Rate

United States $3,340 $127,000 2.8 %

Japan: 2.95%
Taiwan: 2.75%

1.1
The Importance of Economic Growth
Mean: $3390, SD:0.89, Tanzania: $381, US $12,270, Switzerland US$ 14,980

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1.1
The Importance of Economic Growth
Mean: $8490, SD:1.12, Tanzania: $482 , US $ 33,330, Luxembourg: $43,990

1.1
The Importance of Economic Growth

Poorest vs Richest

• It would take Tanzania 235 years to catch up US, if it grows at 1.8% per year
• It would take Tanzania 154 years to catch up US, if it grows at 2.75% per
year

1.1
The Importance of Economic Growth

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1.1
The Importance of Economic Growth

Poorest vs Richest

•Forty-year differences in growth rates of this magnitude have enormous

consequences for standards of living.
•Taiwan raised its real per capita GDP by a factor of 13 from $1430 in 1960
(rank 76 out of 113 countries) to $18,730 in 2000 (rank 24 of 150), while the
•Democratic Republic of Congo lowered its real per capita GDP by a factor of
0.3 from $980 in 1960 (rank 93 of 113) to $320 in 1995.

1.2
The World Income Distribution

1.2
The World Income Distribution

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1.2
The World Income Distribution

1.2
The World Income Distribution

1.2
The World Income Distribution

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1.3
Empirical Regularities About Economic Growth

Kaldor (1963) listed number of Stylized facts about economic growth

1. Per capita output grows over time, and its growth rate does not tend to
diminish.
2. Physical capital per worker grows over time.
3. The rate of return to capital is nearly constant.
4. The ratio of physical capital to output is nearly constant.
5. The shares of labor and physical capital in national income are nearly
constant.
6. The growth rate of output per worker differs substantially across countries

1.3
Empirical Regularities About Economic Growth

1.3
Empirical Regularities About Economic Growth

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1.3
Empirical Regularities About Economic Growth

Marks Distribution and Readings

Midterm Examinations 30 %

Assignments 10 %

Class Participation / 10%

Presentations
Quizzes 10%
Final Exam 40%

Source:

Robert J. Barro AND Xavier Sala-i-Martin. Economic Growth. The MIT Press, Cambridge,
Massachusetts, London, England,. Second Edition.