Vous êtes sur la page 1sur 13

Economic Growth:

Physical, Human & Natural


Unit 10 - Lesson 2

Learning outcomes:
Explain the importance of investment for economic
growth, referring to investment in physical capital, human
capital and natural capital.
Explain the importance of improved productivity for
economic growth.
Describe, using an LRAS diagram, economic growth as
an increase in potential output caused by factors including
increases in the quantity and quality of resources, leading
to a rightward shift of the LRAS curve.

Capital
Capital refers to resources that
can provide a future benefit to the
economy.
Three distinct categories of
Capital:
1. Physical Capital
2. Human Capital
3. Natural Capital

http://exchangedownloads.smarttech.
com/public/content/e0/e0c0566a-883b-47899916-d2838e05fed2/previews/medium/0001.png

Physical & Human Capital


Physical Capital
Refers to investment in producing
machines, equipment and roads.
Human Capital

http://study.
com/cimages/multimages/16/physi
cal-capital-tractors.jpg

Skills, education, training and overall


health of workers.
Investment in schools, training
programs and public health.
http://4.bp.blogspot.com/usg0mSUFQWQ/UZw6xWyTJKI/AAAAAAAAAzQ/nLShKKg
8qdA/s1600/C.human-capital1.jpg

Natural Capital
Land is everything below and on the
land including the eco-system.
Where Land does not change, Natural
Capital does due to investment and or
destruction of Land.
Destroyed: cutting down of the
rainforests, depleting fish
Improved: planting trees, investment in
technology with the aim of preserving the
Land.

https://upload.wikimedia.
org/wikipedia/commons/1/1a/Bachalpseeflower
s.jpg

Investment in Capital & the Factors of


Production
Factors of Production

Type of Capital

Land

Investment in Natural Capital

Labor

Investment in Human Capital

Physical

Related to investment in Physical


Capital

Investment in Capital is a crucial part of achieving Economic Growth

Physical Capital & Economic Growth


Improvement in quantity and the quality of
Physical Capital arises from Investment.
Investment in Physical Capital is an important
part to an economy achieving sustained
Economic Growth over long periods of time.
Investment aimed at Improving the quality
of goods through improvement in
technology leads to a greater output.

https://ib-economics.wikispaces.
com/file/view/capital_250x251.
jpg/193240386/capital_250x251.jpg

Human Capital & Economic Growth


Increases in the quantity of labor does not
necessarily translate into sustained Economic
Growth over long periods of time.
Improvements in the quality of human capital is
an integral component of sustained Economic
Growth. Investment in Merit Goods.
Investment in Human Capital include:
1. Education
2. Vocational training
3. Health services

http://thumbs.dreamstime.com/z/human-resourceintellectual-capital-investment-vector-illust-cartoonillustration-showing-hand-putting-money-head-53931974.jpg

Natural Capital & Economic Growth


Two categories:
1. Commodities that are bought & sold
a. Coal
b. Oil
c. Gas
d. Timber
2. Common Access Resources
a. Soil
b. Air quality
c. Ozone layer

http://images.bwbx.io/cms/2012-0426/econ_coal18__01__630x420.jpg

http://i.huffpost.com/gen/361091/images/r-FOREST-large570.jpg

Natural Resources & Economic Growth


Commodities that can be bought & sold are
not essential to an economy achieving
Economic Growth.
Investing in Common Access Resources is
an integral part of an economy sustaining
Economic Growth over long periods of time.
What challenges can arise for the
country illustrated in the picture for
Economic Growth in the future?

http://www.ecns.cn/visual/hd/2014/0117/U429P886T15D31444F104DT20140117
085423.jpg

Productivity & Economic Growth


Productivity is the amount of output
produced for per hour for the population.
Improvements in productivity happen
when workers are more productive:
1. Improvements in quantity & quality of
Physical Capital
2. Investment in Human Capital
3. Investment & improvements in
maintaining the quantity and quality
of Natural Resources

http://yukaichou.com/wpcontent/uploads/2014/10/Top-10-GamificationApps-to-be-Productive-Image.jpg

Consumption vs. Investment


Opportunity Cost
In order to achieve long term sustainable growth
it is necessary to make trade-offs between
consumption and Investment.
It is necessary to sacrifice some consumption
now in order to make investments that will
improve human, physical and natural capital in
the future.
http://www.chinadaily.com.
cn/opinion/images/attachement/jpg/site1/20130402/00221917f7
6012c4683e03.jpg

Economic Growth & LRAS

Tragakes, pg. 300

Vous aimerez peut-être aussi