Chapter 7 The Wealth of Nations and Economic Growth Chapter Outline

Chapter 7

• The Wealth of Nations and Economic
• Growth

Chapter Outline

• Key Facts About the Wealth of Nations and Economic Growth
• Understanding the Wealth of Nations
• Incentives and Institutions
• Appendix: The Magic of Compound Growth Using a Spreadsheet.

Every year 1.8 million children die from diarrhea.

• Introduction

• Every year 1.8 million children die from diarrhea.
• Preventing these deaths requires only one thing: economic growth.
• Health and wealth go together.
• The next figure shows that the higher the GDP per capita the greater is the survival rate of newborns.

• Introduction

Wealth is clearly important. This leads us to ask three questions:

• Introduction

• Wealth is clearly important. This leads us to ask three questions:
• Why are some nations wealthy while others are poor?
• Why are some nations getting wealthier faster than others?
• Can anything be done to help poor nations become wealthy?
• In this chapter and the next, we will try to answer some of these questions.

Three Key Facts

• Wealth of Nations and Economic Growth

• Three Key Facts
• GDP per Capita Today Varies Enormously among Nations
• Everyone Used to Be Poor
• There are Growth Miracles and Growth Disasters
• Let’s look at each of these in turn.

• GDP Per Capita Varies Among Nations

• Everyone Used to Be Poor

How is economic growth measured?

• A Primer on Growth Rates

• How is economic growth measured?
• Example:
• Year real GDP per capita
• 2008 $15,000 billion
• 2009 $15,500 billion