ECON 2301 Exam 4 Flashcards (ACC, Briggeman)

Historical U.S. Growth Since 1800

A developed country model where Real GDP grew exponentially faster than population growth, dramatically raising living standards over two centuries.

Early Developed Countries

The richest nations characterized by slow, steady growth starting around 1800 (US, Canada, Western Europe) or 1870 (Australia, New Zealand).

Late Developed Countries

East Asian economies (Japan, South Korea, Taiwan, Hong Kong, Singapore) that saw little early growth but exploded with rapid catch-up growth from 1950 to 2000.

Developing Countries (Above World Average)

Nations currently holding 30-60% of US GDP per capita, including Latin America, Eastern Europe, Russia, and Central Asia.

Developing Countries (Lower GDP/Late Growth)

Nations under 30% of US GDP per capita with flat historical growth until sudden modern turnarounds, like China (1978), India (1991), and Sub-Saharan Africa (2000).

Hard to Generalize Developing Countries

Regions staying below 60% of US GDP per capita with highly diverse economic paths, including North Africa, the Middle East, and Southeast Asia.

Extreme Poverty in 1990

Around 2 billion people, representing 36% of the global population.

Extreme Poverty in 2010

Around 1.2 billion people, representing 17% of the global population.

Extreme Poverty in 2020

Around 750 million people, representing 10% of the global population.

Deirdre McCloskey's Theory

The Great Divergence was caused by an increasing cultural respect for middle-class work and ordinary commercial jobs that were previously shamed.

Joel Mokyr's Marauder Theory

European growth was aided by natural geographical defenses (like in Britain and the Netherlands) that successfully thwarted marauders and protected wealth.

Joel Mokyr's Knowledge Theory

The Scientific Revolution and Enlightenment created an improved, widely disseminated knowledge base that accelerated technological invention.

Robert C. Allen's Theory

The Industrial Revolution was driven by high wages and low energy costs, which financially incentivized the use of labor-saving machinery.

Developed Country Growth Differences

Recent growth variations among rich nations remain mostly unexplained because macroeconomic data is highly imprecise.

Cause of Very High Growth Rates

The rapid adoption, acquisition, and imitation of successful policies, institutions, and technologies already developed and proven elsewhere.

Cause of Low or Negative Growth Rates

Geographic distance from NW Europe, foreign invasion, colonial extraction, civil wars, and deep political conflicts.

Colonization of Africa (1881-1970s)

A clear historical cause of low or negative economic growth driven by coordinated European invasion, oppression, and resource extraction.

Central Planning Failure

An aggressive top-down economic system where public decision-makers lack the precise, localized knowledge that private decision-makers hold under capitalism.

Mercantilism

An economic approach designed primarily to protect and help existing domestic producers, which historically led some 20th-century countries toward central planning.

Liberalism (The Liberal Plan)

An economic philosophy opposing mercantilism that advocates for reducing or eliminating tariffs and barriers to market entry.

Future of Economic Growth

Driven fundamentally by human brains creating new ideas, which allows society to do things differently than in the past.