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Measuring Growth and Development
Econ 112 Economic Development Dr. Haight Fall 2014
Housekeeping Readings
Text Chp 2 Two supplemental readings on the MDGs
Tasks Start forming your video project groups
4-5 people Proposal due Sep 17
Choose your first book and start reading Provocative Lecture
Dr. David Skarbek 5:15-6:45pm Student Union Theatre Sep 8 Why do
Prison Gangs Exist?
Measuring Economic Growth
Gross National Product (GNP) value of all finished goods and
services produced by a society during a given year (includes that
produced by citizens outside the country)
Gross Domestic Product (GDP) value of all finished goods and
services produced within a country durng a given year
Per capita income GDP or GNP divided by the population
Real numbers are adjusted for inflation
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Measuring GDP What doesnt GDP capture?
Lots of informal or extralegal income Income distribution Price
differences Currency issues Value of leisure Environmental
Factors
Is GDP the same thing as productivity?
Productivity is the effectiveness with which factors of
production are converted into output.
Problems with GDP measurements
Activities that are not included mean GDP is understated
As countries grow, and more is accounted for, GDP growth can be
overstated
Measurement and tracking in developing world can be
unreliable
GDP doesnt account for things like pollution, depletion of
natural resources, crime levels, congestion. Should it?
Exchange Rate Conversion To compare different countries GDP/GNP,
must
convert to the same currency.
Problems: Exchange rates can be distorted Non-tradable goods
(haircuts)
Exchange rates determined in part by trade
Solution: Purchasing Power Parity
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Calculating PPP
Economic Growth A new economic topic!
The History of Economic Growth
Doesnt really exist From 0AD to 1000AD, essentially no growth at
all For next 800 years.and increase of only 50%
For comparison, Chinas GDP per capita increased 50% over a 5
year period!
Economic Growth began for some countries in approximately 1820.
Why? What happened to change things?
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GDP by region over time
Housekeeping Readings
Text Chp 2 Two supplemental readings on the MDGs
Tasks Start forming your video project groups
4-5 people Proposal due Sep 17
Choose your first book and start reading Provocative Lecture
Dr. David Skarbek 5:15-6:45pm Student Union Theatre Sep 8 Why do
Prison Gangs Exist?