Economic Growth: Institutions and Investment

These flashcards cover key vocabulary and concepts related to economic growth, institutions, and investment from the lecture notes.

Economic growth

The increase in the wealth of a nation, which enhances societal well-being, allowing for higher living standards.

Wealthier nations

Countries with higher levels of income that experience better health, education, and overall quality of life.

Life Expectancy

The average number of years a person is expected to live, often indicating the overall health of a population.

Infant Mortality

The number of infant deaths per 1,000 live births, used as a key indicator of overall health and social stability.

GDP (Gross Domestic Product) per capita

A measure of a country's economic output that accounts for its number of people, often used to gauge economic performance.

Growth miracles

Nations that experience rapid economic growth, improving their GDP significantly over a short period.

Growth disasters

Nations that experience significant economic decline, often resulting in impoverished conditions and reduced GDP.

Rule of 70

A formula to estimate the number of years required for an investment to double, calculated by dividing 70 by the annual growth rate.

Physical capital

Tangible assets such as machinery and buildings that are used in the production process.

Human capital

The collective skills, knowledge, and experience possessed by individuals, crucial for improving productivity.

Technological knowledge

Understanding and application of technology to create goods and services, driving economic growth.

Institutions

The formal and informal 'rules of the game' that shape economic incentives and performance.

Property rights

Legal rights to use, manage, and transfer property, essential for encouraging investment and economic growth.

Honest government

A government that is trustworthy and minimizes corruption, enhancing economic stability and growth.

Dependable legal system

A legal framework that protects individual rights, enforces contracts, and resolves disputes fairly.

Diminishing returns on capital

The economic principle that as more capital is added, the additional output produced from that capital decreases.

Depreciation

The reduction in value of capital assets over time due to usage and wear.

Investment

The act of allocating resources, usually money, in order to generate income or profit.

Causes of growth

Factors that lead to increased economic production, including investment in capital and technological advancements.