Supplementary resources for high school students
Definitions and Basics
Economic Growth, by Paul Romer, 2018 Nobel Laureate, from the Concise Encyclopedia of Economics
Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable. A useful metaphor for production in an economy comes from the kitchen. To create valuable final products, we mix inexpensive ingredients together according to a recipe. The cooking one can do is limited by the supply of ingredients, and most cooking in the economy produces undesirable side effects. If economic growth could be achieved only by doing more and more of the same kind of cooking, we would eventually run out of raw materials and suffer from unacceptable levels of pollution and nuisance. Human history teaches us, however, that economic growth springs from better recipes, not just from more cooking. New recipes generally produce fewer unpleasant side effects and generate more economic value per unit of raw material….
Economic Growth, at Wikipedia.com
Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP.
Growth is usually calculated in real terms–i.e., inflation-adjusted terms–to eliminate the distorting effect of inflation on the price of goods produced. Measurement of economic growth uses national income accounting. Since economic growth is measured as the annual percent change of gross domestic product (GDP), it has all the advantages and drawbacks of that measure. The economic growth rates of nations are commonly compared using the ratio of the GDP to population or per-capita income….
In the News and Examples
Gregg Easterbrook on the American Standard of Living, EconTalk podcast episode, March 2007
Author Gregg Easterbrook talks about the ideas in his latest book, The Progress Paradox: How Life Gets Better While People Feel Worse. How has life changed in America over the last century? Is the average person getting ahead or are the rich taking all the gains? Easterbrook argues that life is better for the average American in almost every dimension. The paradox is that despite those gains, we don’t seem much happier….
Paul Romer on Growth. Interview with Paul Romer years before his Nobel laureate. EconTalk podcast episode, August 27, 2007.
Paul Romer, Stanford University professor and Hoover Institution Senior Fellow talks with EconTalk host Russ Roberts about growth, China, innovation, and the role of human capital. Also discussed are ideas in creating growth, the idea that ideas allow for increasing returns, and intellectual property and how it should be treated. This 75 minute podcast is a wonderful introduction to thinking about what creates and sustains our standard of living in the modern world….
Japan and the Myth of MITI from the Concise Encyclopedia of Economics
At the end of World War II, Japan’s economy was in tatters. Some 40 percent of its capital stock was destroyed during the war, and the Japanese standard of living was at pre-World War I levels. Today Japan has the second-largest economy in the world and its growth is the envy of most of the world….
Third World Economic Development from the Concise Encyclopedia of Economics
The development experiences of Third World countries since the fifties have been staggeringly diverse—and hence very informative. Forty years ago the developing countries looked a lot more like each other than they do today. Take India and South Korea. By any standards, both countries were extremely poor: India’s income per capita was about $150 (in 1980 dollars) and South Korea’s was about $350….
Economic Growth and crowding out of public projects: Research and Development from the Concise Encyclopedia of Economics
Research and development (R&D) is the creation of knowledge to be used in products or processes….
Industrial Revolution and the Standard of Living from the Concise Encyclopedia of Economics
Between 1760 and 1860, technological progress, education, and an increasing capital stock transformed England into the workshop of the world. The industrial revolution, as the transformation came to be called, caused a sustained rise in real income per person in England and, as its effects spread, the rest of the Western world….
A Little History: Primary Sources and References
If economic growth is widely accepted, as it seems to be, as a desirable attribute of a well-functioning economic system, public policies aimed at increasing the rate of growth may seem advisable. Implicit in any public action to stimulate growth is the assumption that the rate of growth produced by individual choices within the institutional complex of social, economic, and political forces is less than a “desired” or “optimum” rate…. [par. 2.13.21]
Robert Lucas on Growth, Poverty and Business Cycles, podcast on EconTalk, February 05, 2007.
Bob Lucas, Nobel Laureate and professor of economics at the University of Chicago talks about wealth and poverty, what affects living standards around the world and over time, the causes of business cycles and the role of the money in our economy. Along the way, he talks about Jane Jacobs, immigration, and Milton Friedman’s influence on his career….