Lecture Development policy: Economic growth includes content: the neoclassical growth model, the Solow model of growth, labor productivity in the Solow model, neoclassical growth model with endogenous technology,... We invite you to refer to the lecture Đề tài Hoàn thiện công tác quản trị nhân sự tại Công ty TNHH Mộc Khải Tuyên được nghiên cứu nhằm giúp công ty TNHH Mộc Khải Tuyên làm rõ được thực trạng công tác quản trị nhân sự trong công ty như thế nào từ đó đề ra các giải pháp giúp công ty hoàn thiện công tác quản trị nhân sự tốt hơn trong thời gian tới.
cy fj vw wt tj1 ưz zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv 5w xt 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z FULBRIGHT SCHOOL OF PUBLIC POLICY AND MANAGEMENT 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 ư0 xq fy2 xx v 7ư m er nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 ws eo 80 a6 i2 z6 jjx j3 ef b1 1m ah q5 px y4 zq x 89 itj ok qp bc nr ư9 g2 yw d1 l9 qq xv w2 ry 3n jw 61 6g sh k9 sa jk ưo 3d nl h 4h m 4s 73 3p a7 9w i7 qj 4f 9w sd 7s yg gq ht 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 or 13 j ku m ư8 qn un xv tb ig k2 ax il h5 b1 ol fw 4m ap er e9 vd of ưq d0 p 4ja 89 f ye zl2 b3 tm ưy 2v p zig wi 2w zw f5 b7 ze ưh 34 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 7lư 40 z6 6e ee sv sy Economic Growth g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot xn r7 4c 2r rc 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh x ưp ikg 3o cr sb ib 97 y1 hh kp l3 1y ug rw wg rq 2z kl 0a r0 0h yb q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 ax 23 zb 7v 35 cn du k0 xk ju y7 co 61 sw fk vd tu 88 0i c4 xo zx xt t3 gk 1w 9e ea jeq p tn o9 gz 34 Development Policy Summer 2023 iư o9 l0a gd o1 3q y iw m rz q lln yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif ưg n2 lb 5k lx vv 1t c2 cr cy fj vw wt tj1 ưz zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv Adam Smith The Wealth of Nations (1776) 5w xt 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 ư0 xq fy2 xx v 7ư m er nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 ws eo 80 a6 i2 z6 jjx j3 ef b1 1m ah q5 px y4 zq x 89 itj ok qp bc nr ư9 g2 yw d1 l9 qq xv w2 ry 3n jw 61 6g sh k9 sa jk ưo 3d nl h 4h m 4s 73 3p a7 9w i7 qj 4f 9w sd 7s yg gq ht • 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 or 13 j ku m ư8 qn un xv tb ig k2 ax il h5 b1 ol fw 4m ap er e9 vd of ưq d0 p 4ja 89 f ye zl2 b3 tm ưy 2v p zig wi 2w zw f5 b7 ze ưh 34 Adam Smith 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 7lư 40 z6 6e ee sv sy g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot xn r7 4c 2r rc 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh • x ưp ikg 3o cr sb ib 97 y1 hh kp l3 1y ug rw wg rq 2z kl 0a r0 0h yb q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 ax 23 zb 7v 35 cn du k0 xk ju y7 co The sources of economic growth are specialization and the division of labor Smith anticipated modern manufacturing: • Skills develop when performing repeated tasks: “learning by doing” – we now call this dynamic increasing returns • The assembly line: no time lost switching between tasks; speed and precision • Mechanization of simple tasks (capital equipment) Specialization and the division of labor depend on the size of the market → Smith never assumed that everything produced will automatically find a market • 61 sw fk vd tu 88 0i c4 xo zx xt t3 gk 1w 9e ea jeq p tn o9 gz 34 iư o9 l0a gd o1 3q y iw m rz q lln yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif © Fulbright University Vietnam ưg n2 lb 5k lx vv 1t c2 cr cy fj vw wt tj1 ưz zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv Hla Myint and ‘Vent for Surplus” in Southeast Asia 5w xt 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 ư0 xq fy2 xx v 7ư m er nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 ws eo 80 a6 i2 z6 jjx j3 ef b1 1m ah q5 px y4 zq x 89 itj ok qp bc nr ư9 g2 yw d1 l9 qq xv w2 ry 3n jw 61 6g sh k9 sa jk ưo 3d nl h 4h m 4s 73 3p a7 9w i7 qj 4f 9w sd 7s yg gq ht 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 or 13 j ku m ư8 qn un xv tb ig k2 ax il h5 b1 ol fw 4m ap er e9 vd of ưq d0 p 4ja 89 f ye zl2 b3 tm ưy 2v p zig wi 2w zw f5 b7 ze ưh 34 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 7lư 40 z6 6e ee sv sy g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot xn r7 4c 2r rc 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh x ưp ikg 3o cr sb ib 97 y1 hh kp l3 1y ug rw wg rq 2z kl 0a r0 0h yb Southeast Asia traditionally exported plantation crops (rubber, coffee, rice) bringing land into production (recall Southeast Asia’s land-abundant past) • Myint was an early proponent of export-led growth (opposed to the export pessimism of Gunnar Myrdal) • Export markets create opportunities to realize economies of scale → example of shrimp and catfish in MRD • Profitability drives capital investment, which increases productivity and profits (recall the Lewis Model) Hla Myint • q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 ax 23 zb 7v 35 cn du k0 xk ju y7 co 61 sw fk vd tu 88 0i c4 xo zx xt t3 gk 1w 9e ea jeq p tn o9 gz 34 iư o9 l0a gd o1 3q y iw m rz q lln yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif © Fulbright University Vietnam ưg n2 lb 5k lx vv 1t c2 cr cy fj vw wt tj1 ưz zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv The neoclassical growth model 5w xt 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 ư0 xq fy2 xx v 7ư m er nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 ws eo 80 a6 i2 z6 jjx j3 ef b1 1m ah q5 px y4 zq x 89 itj ok qp bc nr ư9 g2 yw d1 l9 qq xv w2 ry 3n jw 61 6g sh k9 sa jk ưo 3d nl h 4h m 4s 73 3p a7 9w i7 qj 4f 9w sd 7s yg gq ht 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 or 13 j ku m ư8 qn un Neoclassical economists assume full employment and savings always equal to investment ▪ The neoclassical growth model made other assumptions to keep the math simple ▪ xv tb ig k2 ax il h5 b1 ol fw 4m ap er e9 vd of ưq d0 p 4ja 89 f ye zl2 b3 tm ưy 2v p zig wi 2w zw f5 b7 ze ưh 34 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 7lư 40 z6 6e ee sv sy g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot xn r7 4c 2r rc 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh x ưp ikg 3o cr sb ib 97 y1 hh kp l3 1y ug rw wg rq 2z kl 0a r0 0h yb q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 The economy consists of one sector (no movements from agriculture to industry) ▪ Constant returns to scale and diminishing returns to capital ▪ Technology changes over time but at a constant rate ▪ The labor force grows at the same rate as the population (all labor is employed) ▪ ax 23 zb 7v 35 cn du k0 xk ju y7 co 61 sw fk vd tu 88 0i c4 xo zx xt t3 gk 1w 9e ea jeq p tn o9 gz 34 iư o9 l0a gd o1 3q y iw m rz q lln yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif © Fulbright University Vietnam ưg n2 lb 5k lx vv 1t c2 cr cy fj vw wt tj1 ưz zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv The Solow model of growth 5w xt 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 ư0 xq fy2 xx v 7ư m er nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 ws eo 80 a6 i2 z6 jjx j3 ef b1 1m ah q5 px y4 zq x 89 itj ok qp bc nr ư9 g2 yw d1 l9 qq xv w2 ry 3n jw 61 6g sh k9 sa jk ưo 3d nl h 4h m 4s 73 3p a7 9w i7 qj 4f 9w sd 7s yg gq ht 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 or 13 j ku m ư8 qn un xv tb ig k2 ax il h5 b1 ol fw 4m ap er e9 vd of ưq d0 p 4ja 89 f ye zl2 b3 tm ưy 2v p zig wi 2w zw f5 b7 ze ưh 34 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 7lư 40 z6 6e ee sv sy g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot xn r7 4c 2r rc 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh x ưp ikg 3o cr sb ib 97 y1 hh kp l3 1y ug rw wg rq 𝑌 = 𝑇𝐾 𝛼 𝐿1−𝛼 ▪ where Y is income (GDP), T is constant technological progress (constant), K is capital and L is labor ▪ α is the elasticity of output with respect to capital, and (1- α ) is the elasticity of output with respect to labor ▪ Because α + (1- α) = 1, we know the system has constant returns to scale and diminishing returns to capital and labor ▪ Increasing K and L by 1% results in a 1% increase in Y 2z kl 0a r0 0h yb q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 ax 23 zb 7v 35 cn du k0 xk ju y7 co 61 sw fk vd tu 88 0i c4 xo zx xt t3 gk 1w 9e ea jeq p tn o9 gz 34 iư o9 l0a gd o1 3q y iw m rz q lln yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif © Fulbright University Vietnam ưg n2 lb 5k lx vv 1t c2 cr cy fj vw wt tj1 ưz zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv Labor productivity in the Solow model 5w xt 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 ư0 xq fy2 xx v 7ư m er nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 ws eo 80 a6 i2 z6 jjx j3 ef b1 1m ah q5 px y4 itj zq ok qp bc nr ư9 g2 yw d1 l9 qq xv w2 ry 3n jw 61 6g sh k9 sa jk ưo 3d nl h 4h m 4s 73 3p a7 9w i7 qj 4f 9w sd 7s yg gq ht 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 or 13 j ku m ư8 qn un xv tb ig k2 ax il h5 b1 ol fw 4m ap er e9 vd of ưq d0 p 4ja 89 f ye zl2 b3 tm ưy 2v p zig wi 2w zw f5 b7 ze ưh 34 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 7lư 40 z6 6e ee sv sy g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot xn r7 4c 2r rc 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh x ưp ikg 3o cr sb ib 97 y1 hh kp l3 1y ug rw wg rq 2z kl 0a r0 0h yb q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 ax 23 zb 7v 35 cn du k0 xk ju y7 co 61 sw fk vd tu 88 0i c4 xo zx xt t3 gk 1w 9e ea = = ▪ Y/L is labor productivity (output per person) Let’s call that q ▪ K/L is the capital-labor ratio (the amount of capital per worker) Let’s call that k ▪ 𝑞 = 𝑇(𝑘)𝛼 or labor productivity is equal to technology applied to the capital-labor ratio, growing at a constant rate but less than one ▪ The level of labor productivity (q) depends on the amount of capital per worker (k) ▪ But there are diminishing returns to capital so the rate of growth of q is slower when the capital-labor ratio is higher (α is less than 1) x 89 𝐾 𝛼 𝑇( ) 𝐿 𝑇𝐾𝛼 𝐿1−𝛼 𝐿 𝑌 𝐿 jeq p tn o9 gz 34 iư o9 l0a gd o1 3q y iw m rz q lln yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif © Fulbright University Vietnam ưg n2 lb 5k lx vv 1t c2 cr zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv 5w xt 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 ư0 xq fy2 xx v 7ư m nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 80 a6 i2 z6 jjx j3 ef b1 1m ah q5 px y4 T=0.75 ws eo zq ok qp bc nr ư9 g2 yw 3,0% x 89 itj d1 l9 qq xv w2 ry 3n jw 61 6g sh k9 sa jk ưo 3d nl h 4h m 4s 73 3p a7 9w i7 qj 4f 9w sd gq ht 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 13 j ku m ư8 qn un xv tb ig k2 ax il h5 b1 ol fw 4m ap er e9 vd of ưq d0 p 4ja 89 f ye zl2 b3 tm ưy 2v p zig wi 2w zw b7 ze ưh 34 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 40 z6 6e ee sv sy 1,0% 7lư g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot xn r7 4c 2r rc 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh x ưp ikg 3o cr sb ib 97 y1 hh kp l3 1y ug rw wg rq 2z kl 0a r0 0h yb 0,0% 0,0 q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 ax 23 zb 7v 35 cn du k0 xk ju y7 co 61 sw fk vd tu 88 K/L 0,5% 0,2 1,5% f5 0,4 2,0% or 0,6 T=0.6 0,8 2,5% 7s yg 0i c4 xo zx xt t3 gk 1w 9e ea jeq p tn o9 gz 34 iư o9 l0a gd o1 3q y iw m rz Growth of Y/L Y/L2 Y/L 3,5% er 1,0 • 1,2 Growth of Y/L ưz 0,10 0,15 0,20 0,25 0,30 0,35 0,40 0,45 0,50 0,55 0,60 0,65 0,70 0,75 0,80 0,85 0,90 0,95 1,00 1,05 1,10 1,15 1,20 1,25 1,30 1,35 1,40 1,45 1,50 1,55 1,60 1,65 1,70 1,75 1,80 1,85 1,90 1,95 2,00 2,05 tj1 q lln yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 Source: Frances Stewart 2019 Labor productivity growth quickly declines to zero • Technology still raises the level of labor productivity, but not the growth rate of labor productivity Y/L cy fj vw wt At higher levels of K/L, more capital does not increase labor productivity (Y/L) zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif © Fulbright University Vietnam ưg n2 lb 5k lx vv 1t c2 cr cy fj vw wt tj1 ưz zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv The neoclassical growth model 5w xt 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 ư0 xq fy2 xx v 7ư m er nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 ws eo 80 a6 i2 z6 jjx j3 ef b1 1m ah q5 px y4 zq x 89 itj ok qp bc nr ư9 g2 yw d1 l9 qq xv w2 ry 3n jw 61 6g sh k9 sa jk ưo 3d nl h 4h m 4s 73 3p a7 9w i7 qj 4f 9w sd 7s yg gq ht 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h ▪ 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 or 13 j ku m ư8 qn un xv tb ig k2 ax il h5 b1 Classical economists like Adam Smith and Hla Myint emphasized capital investment, the division of labor and trade as the sources of economic growth Neoclassical growth models use some restrictive assumptions that changed the growth policy agenda for a generation ▪ ol fw 4m ap er e9 vd of ưq d0 p 4ja 89 f ye zl2 b3 tm ưy 2v p zig wi 2w zw f5 b7 ze ưh 34 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 7lư 40 z6 6e ee sv sy g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot xn r7 4c 2r rc 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh x ưp ikg 3o cr sb ib 97 y1 hh kp l3 1y ug rw wg rq 2z kl 0a r0 0h yb q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 ax 23 zb 7v 35 cn du k0 xk ju y7 co 61 sw fk vd tu 88 0i c4 xo zx xt t3 gk 1w 9e ea jeq p tn o9 gz 34 iư o9 l0a The assumption of diminishing returns to capital led many economists to conclude that investment doesn’t matter ▪ The assumption that technology is external to investment led economists to see technology as unrelated to economic policy ▪ The assumption of a single sector blinded economists to the importance of the manufacturing sector in the early stages of development ▪ The assumption of full employment led to the conclusion that poor countries had to trade-off between investment and consumption ▪ gd o1 3q y iw m rz q lln yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif © Fulbright University Vietnam ưg n2 lb 5k lx vv 1t c2 cr cy fj vw wt tj1 ưz zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv What does the Solow model mean? 5w xt 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 xx v 7ư nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 ws eo 80 a6 i2 z6 jjx j3 ef b1 1m ah q5 px y4 zq x 89 itj ok qp bc nr ư9 g2 yw d1 l9 qq xv w2 ry 3n jw 61 6g sh k9 sa jk ưo 3d nl h 4h m 4s 73 3p a7 9w i7 qj 4f 9w sd 7s yg gq ht 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 or 13 j ku m ư8 qn un xv tb ig k2 ax il h5 b1 ol fw 4m ap er e9 vd of ưq d0 p 4ja 89 f ye zl2 b3 tm ưy 2v p zig wi 2w zw f5 b7 ze ưh 34 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 7lư 40 z6 6e ee sv sy g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot xn r7 4c 2r rc 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh x ưp ikg 3o cr sb ib 97 y1 hh kp l3 1y ug rw wg rq 2z kl 0a r0 0h yb q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 ax 23 zb 7v 35 cn du k0 xk ju y7 co • m • er • ư0 xq fy2 • 61 sw fk vd tu 88 0i c4 xo zx xt t3 gk 1w 9e ea jeq p tn o9 gz 34 iư o9 l0a gd o1 3q y iw m rz The main conclusion is that economic growth should be faster in poor countries (lower K/L) and slower in rich countries (higher K/L) We should see convergence in incomes over time between poor and rich countries (we will discuss this I the next class) The savings rate affects the level of income at the steady state (higher K/L at the steady state), but not the rate of economic growth, which is external to the model (technological change and the rate of population growth) Investment always equals savings and there is no unemployment → a supply side model with no role for demand A higher investment rate can’t raise the rate of growth: growth is largely explained by technology, which is not explained • q lln yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif © Fulbright University Vietnam ưg n2 lb 5k lx vv 1t c2 cr cy fj vw wt tj1 ưz zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv Neoclassical growth model with endogenous technology 5w xt 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 ư0 xq fy2 xx v 7ư m er nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 ws eo 80 a6 i2 z6 jjx j3 ef b1 1m ah q5 px y4 bc nr ư9 g2 yw d1 l9 qq xv w2 ry 3n jw 61 6g sh k9 sa jk ưo 3d nl h 4h m 4s 73 3p a7 9w i7 qj 4f 9w sd 7s yg gq ht 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 or 13 j ku m ư8 qn un xv tb ig k2 ax il h5 b1 ol fw 4m ap er e9 vd of ưq d0 p 4ja 89 f ye zl2 b3 tm ưy 2v p zig wi 2w zw f5 b7 ze ưh 34 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 7lư 40 z6 6e ee sv sy g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot xn r7 4c 2r rc 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh x ưp ikg 3o cr sb ib 97 y1 hh kp l3 1y ug rw wg rq 2z kl 0a r0 0h yb q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 ax 23 zb 7v 35 cn du k0 xk ju y7 co The investment rate matters because diminishing returns will not set in at higher K/L ratios • If there are positive externalities from research and development activity, then returns to capital will not fall (Romer) • Or education, or trade, or infrastructure or any other reason that prevents Y/L from falling as K/L rises • ok qp Poor countries were not converging with the rich Technology has a direct relationship to labor productivity and is not constant or the same for every country • Constant returns to scale and diminishing returns to capital were but not very realistic • • zq x 89 itj “Endogenous growth theory” drops the assumption of constant returns to scale and diminishing returns to capital • The conclusions of the Solow model were increasingly at odds with the real world • 61 sw fk vd tu 88 0i c4 xo zx xt t3 gk 1w 9e ea jeq p tn o9 gz 34 iư o9 l0a gd o1 3q y iw m rz q lln yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif 10 © Fulbright University Vietnam ưg n2 lb 5k lx vv 1t c2 cr cy fj vw wt tj1 ưz zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv Old wine in new bottles? 5w xt 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 ư0 xq fy2 xx v 7ư m er nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 ws eo 80 a6 i2 z6 jjx j3 ef b1 1m ah q5 px y4 zq x 89 itj ok qp bc nr ư9 g2 yw d1 l9 qq xv w2 ry 3n jw 61 6g sh jk ưo 3d nl h 4h m 4s 73 3p a7 9w i7 qj 4f 9w sd 7s yg gq ht 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 or 13 j ku m ư8 qn un xv tb ig k2 ax il h5 b1 ol fw 4m ap er e9 vd of ưq d0 p 4ja 89 f ye zl2 b3 tm ưy 2v p zig wi 2w zw f5 b7 ze ưh 34 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 7lư 40 z6 6e ee sv sy g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot xn r7 4c 2r rc 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh x ưp ikg 3o cr sb ib 97 y1 hh kp l3 1y ug rw wg rq 2z kl 0a r0 0h yb q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 ax 23 zb 7v 35 cn du k0 xk ju y7 co 61 sw fk vd tu 88 0i c4 xo zx xt t3 gk 1w 9e ea jeq p tn o9 gz 34 iư o9 l0a gd o1 3q y iw m rz q lln yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư New inventions simulate investment, raising investment rate and growth rate • Countries grow at different rates because they are on different production functions, using different technologies • k9 Remember Adam Smith, the division of labor, increasing returns to scale and the accumulation of capital • Nicholas Kaldor (1957): Technological progress is not separate from K, it is embedded in it • sa When diminishing returns to capital set in, new inventions come along and increase the productivity and capital • Endogenous growth theory seeks to explain the absence of diminishing returns to capital within the neoclassical framework • z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif 11 © Fulbright University Vietnam ưg n2 lb 5k lx vv 1t c2 cr cy fj vw wt tj1 ưz zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv What is missing in these stories about growth? Government 5w xt 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 ư0 xq fy2 xx v 7ư m er nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 ws eo 80 a6 i2 z6 jjx j3 ef b1 1m ah q5 px y4 zq x 89 itj ok qp bc nr ư9 g2 yw d1 l9 qq xv w2 ry 3n jw 61 6g sh k9 sa jk ưo 3d nl h 4h m 4s 73 3p a7 9w i7 qj 4f 9w sd 7s yg gq ht 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 or 13 j ku m ư8 qn un xv tb ig k2 ax il h5 b1 ol fw 4m ap er e9 vd of ưq d0 p 4ja 89 f ye zl2 b3 tm ưy 2v p zig wi 2w zw f5 b7 ze ưh 34 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 7lư 40 z6 6e ee sv sy g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot xn r7 4c 2r rc 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh x ưp ikg 3o cr sb ib 97 y1 hh kp l3 1y ug rw wg rq 2z kl 0a r0 0h yb q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 ax 23 zb 7v 35 cn du k0 xk ju y7 co 61 sw fk vd tu 88 0i c4 xo zx xt t3 gk 1w 9e ea jeq p tn o9 gz 34 iư o9 l0a gd Throughout history, governments have played an important role in accelerating and holding back growth • The US developed as a manufacturing power due to Alexander Hamilton’s tariffs on manufactured imports • Japan, Korea, Taiwan and China have all benefited from government support for domestic industries • Infrastructure, investment in research, higher education can move the economy onto a different production function • Taiwan semiconductor industry developed from government research laboratory that bought outdated technology from the US • o1 3q y iw m rz q lln yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif 12 © Fulbright University Vietnam ưg n2 lb 5k lx vv 1t c2 cr cy fj vw wt tj1 ưz zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv What is missing in these stories about growth? Demand 5w xt 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 ư0 xq fy2 xx v 7ư m er nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 ws eo 80 a6 i2 z6 jjx j3 ef b1 1m ah q5 • Demand side: Neoclassical growth theory assumes px y4 zq x 89 itj ok qp bc nr ư9 g2 yw d1 l9 qq xv w2 ry 3n jw 61 6g sh k9 sa jk ưo 3d nl h 4h m 4s 73 3p a7 9w supply always equals demand i7 qj 4f 9w sd 7s yg gq ht 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 or 13 j ku m ư8 qn un xv tb ig k2 ax il h5 b1 ol fw 4m ap er e9 vd of ưq d0 p 4ja 89 f ye zl2 b3 tm ưy 2v p zig wi 2w zw f5 b7 ze ưh 34 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 7lư 40 z6 6e ee sv sy g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot xn r7 4c 2r rc There is no unemployment and savings always equals investment • But development starts from a condition of surplus labor and low productivity, which cannot be assumed away • 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh x ưp ikg 3o cr sb ib 97 y1 hh kp l3 1y • Exports are crucial to growth because demand is not ug rw wg rq 2z kl 0a r0 0h yb q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 ax 23 zb 7v 35 cn du k0 xk ju sufficient in the domestic market y7 co 61 sw fk vd tu 88 0i c4 xo zx xt t3 gk 1w 9e ea jeq p tn o9 gz 34 iư o9 l0a gd o1 3q y iw m rz q lln yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif 13 © Fulbright University Vietnam ưg n2 lb 5k lx vv 1t c2 cr cy fj vw wt tj1 ưz zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv What is missing in these stories about growth? Manufacturing and modern services 5w xt 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 ư0 xq fy2 xx v 7ư m er nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 ws eo 80 a6 i2 z6 jjx j3 ef • In one sector models the rate of productivity growth is b1 1m ah q5 px y4 zq x 89 itj ok qp bc nr ư9 g2 yw d1 l9 qq xv w2 ry 3n jw 61 6g sh k9 sa jk ưo 3d nl h 4h m 4s 73 3p a7 9w i7 qj 4f 9w sd 7s yg gq ht 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 or 13 j ku m ư8 qn un xv tb ig k2 ax il h5 b1 ol fw 4m ap er e9 vd of ưq d0 p 4ja 89 f ye zl2 b3 tm ưy 2v p zig wi 2w zw f5 b7 ze ưh 34 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 7lư 40 z6 6e ee sv sy g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot xn r7 4c 2r rc 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh x ưp ikg 3o cr sb ib 97 y1 hh kp l3 1y ug rw wg rq 2z kl 0a r0 0h yb q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 ax 23 zb 7v 35 cn du k0 xk ju y7 co 61 sw fk vd tu 88 0i c4 xo zx xt t3 gk 1w 9e ea jeq p tn o9 gz 34 an average of all sectors • But in the real world, labor productivity growth depends on the rise of manufacturing and modern services • Potential for increasing returns to scale is not equal in all sectors • If labor is crowded into traditional services growth will slow down iư o9 l0a gd o1 3q y iw m rz q lln yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif 14 © Fulbright University Vietnam ưg n2 lb 5k lx vv 1t c2 cr cy fj vw wt tj1 ưz zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv Measuring Total Factor Productivity Growth (TFP) 5w xt 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 ư0 xq fy2 xx v 7ư m er nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 ws eo 80 a6 i2 z6 jjx j3 ef b1 1m ah q5 • TFP use the Solow Model to estimate growth that is not px y4 zq x 89 itj ok qp bc nr ư9 g2 yw d1 l9 qq xv w2 ry 3n jw 61 6g sh k9 sa jk ưo 3d nl h 4h m 4s 73 3p a7 9w a result of adding more capital or labor per worker i7 qj 4f 9w sd 7s yg gq ht 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 or 13 j ku m ư8 qn un xv tb ig k2 ax il h5 b1 ol fw 4m ap er e9 vd of ưq d0 p 4ja 89 f ye zl2 b3 tm ưy 2v p zig wi 2w zw f5 b7 ze ưh 34 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 7lư 40 z6 6e ee sv sy g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot Interpreted as a measure of technological change (which is outside of the model) • But maintains assumption of diminishing returns to capital and labor and constant returns to scale • xn r7 4c 2r rc 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh x ưp ikg 3o cr sb ib 97 y1 • Technology is not embodied in capital investment (no hh kp l3 1y ug rw wg rq 2z kl 0a r0 0h yb q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 ax 23 zb 7v 35 cn du k0 xk ju y7 co 61 sw fk vd tu 88 0i c4 xo zx xt t3 gk 1w 9e ea jeq p tn o9 gz 34 iư o9 l0a gd o1 3q y iw m rz q lln relationship between the level of investment and the rate of technological change) yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif 15 © Fulbright University Vietnam ưg n2 lb 5k lx vv 1t c2 cr cy fj vw wt tj1 ưz zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv 5w xt Policy implications 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 ư0 xq fy2 xx v 7ư m er nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 ws eo 80 a6 i2 z6 jjx j3 ef b1 1m ah q5 px y4 zq x 89 itj ok qp bc nr ư9 g2 yw d1 l9 qq xv w2 ry 3n jw 61 6g sh k9 sa jk ưo 3d nl h 4h m 4s 73 3p a7 9w i7 qj 4f 9w sd • Neoclassical growth models have limited policy implications: technology is exogenous (external) to the model and the rate of investment does not affect the rate of growth 7s yg gq ht 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 or 13 j ku m ư8 qn un xv tb ig k2 ax il h5 b1 ol fw 4m ap er e9 vd of ưq d0 p 4ja 89 f ye zl2 • New growth theory returns to the lessons of the past: capital investment, technological change and trade b3 tm ưy 2v p zig wi 2w zw f5 b7 ze ưh 34 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 7lư 40 z6 6e ee sv sy g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot xn • But policy implications are still limited: It leaves out government, demand and intersectoral movements of labor r7 4c 2r rc 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh x ưp ikg • Savings are still automatically equal to investment 3o cr sb ib 97 y1 hh kp l3 1y ug rw wg rq 2z kl 0a r0 0h yb q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 ax 23 zb 7v 35 cn du k0 xk ju y7 co 61 sw fk vd tu 88 0i c4 xo zx xt t3 gk 1w 9e ea jeq p tn o9 gz 34 • Total factor productivity is not a reliable measure of the rate of technological change iư o9 l0a gd o1 3q y iw m rz q lln yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif 16 © Fulbright University Vietnam ưg n2 lb 5k lx vv 1t c2 cr cy fj vw wt tj1 ưz zc ae 27 f9 c7 ji dk 66 6a u tlt 5p z kg 1j6 9z bp ci h6 0ư s g3 ytd 2b on ưh cq zs jk as 3b 2b th ud 54 lư ư4 dh 4p ưx 75 3y 8g klq 8w pk ps h2 sx k3 q5 u7 f2 m um nf 8v ec jjo ej xh w7 n9 40 2c g2 8x 2o xd iq id cl 8h jw yv h5 t3 jb 22 bs n0 yi sv 5w xt Discussion questions 62 xv j7s p ưu lm jp o3 gs t 40 lau jrn cj 3g x8 7z 19 55 2w qr rx 4g bg 3f t 2w jvo z5 ay 1b sd c5 ư0 xq fy2 xx v 7ư m er nb w3 xf s w1 lja 5x 54 cj oư 7jz hw 22 qư 1n m rf4 ws eo 80 a6 i2 z6 jjx j3 ef b1 1m ah q5 px y4 zq x 89 itj ok qp bc nr ư9 g2 yw d1 l9 qq xv w2 ry What are the assumptions of the neoclassical growth model? Are they relevant to economic growth in Vietnam? 3n jw 61 6g sh k9 sa jk ưo 3d nl h 4h m 4s 73 3p a7 9w i7 qj 4f 9w sd 7s yg gq ht 3a gh d5 78 wx aq x8 x4 w6 62 oy 47 pe 8g rf tx 9p go ưt an ds 2h 6p u0 df lb kj d4 7x jg u0 9z yl wq h0 ư1 h5 or 13 j ku m ư8 qn un xv tb ig k2 ax il h5 b1 ol fw 4m ap er e9 vd of What are the factors relevant to economic growth that are not addressed in the Solow Model or “new” growth theory? ưq d0 p 4ja 89 f ye zl2 b3 tm ưy 2v p zig wi 2w zw f5 b7 ze ưh 34 43 bj 23 zv bt 4x yh 44 bk dj ay yd pq za oe rc jh rt p3 p2 uw ưj i1 0m ux t 2c llb jg f5 a1 0h 8b wư ah e 3o 7lư 40 z6 6e ee sv sy g5 r0 sg c6 aq q8 na pv 1ư w0 ưp qo ot xn r7 4c 2r rc 84 ze n3 ak cr e6 9s s1 oc fl 63 c6 79 gt rf 2u ka 86 z6 n5 1z p1 wl 6z 2k ku 1r s0 oly aq ti 4ư ưv bk rh x ưp ikg 3o cr sb ib 97 y1 hh kp l3 1y ug rw wg rq 2z kl 0a r0 0h yb q2 w7 ci8 np pu m jm cz fm t1 y0 0f ar qo qe ef 31 ax 23 zb 7v 35 cn du k0 xk ju y7 co 61 sw fk vd tu 88 0i c4 xo zx xt t3 gk 1w 9e ea jeq p tn o9 gz 34 iư o9 l0a gd o1 3q y iw m rz q lln yf fe ie 0w ljy br eu db j s7 ty3 ip z0 bo pư z0 hp jj jjld 1h ad ne n1 ru 1d ug er p3 r3 9w km g2 zw 9b 41 1d x2 wl um b7 fcw j11 bư 6x 46 43 uj t s1 tif 17 © Fulbright University Vietnam ưg n2 lb 5k lx vv 1t c2 cr