CHAPTER 28 Long-Run Growth 長期成長 Prepared by Fernando

Economic Growth (經濟成長) • Economic growth refers to an increase in the total output of an economy(指一經濟體內實質總產出, 暨實質GDP, 的增加）. Defined by some economists as the increase of real GDP per capita(平均每位國民實質GDP的增加）. • Modern economic growth is the period of rapid and sustained increase in real output per capita that began in the Western World with the Industrial Revolution. (現代經濟的成長；指自西歐業革命以來至今的期間內，實質產出不斷快速成長的現象。) © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Industrial Revolution • 經濟史學家給某些國家在經濟和社會組織上發生重大變動的時期所取的名稱。 • 首先是指英國從 1750 -1850期間, • 後又指歐洲大陸上某些國家從 1830年起， • 美國從 1860年起， • 日本從 1870年起，及 • 俄國從 1990年起 • 在這段時期家庭作坊制度為廠所取代， • 業革命在英國是從各種機器的發明、蒸汽動力的採用、勞動分、公路、鐵路和運河交通的發展開始， • 在此時期，亞當‧斯密、馬爾薩斯和李嘉圖等放任主義學說出現、海外市場的開闢、人人平均產量大幅上升，以及生活水平的普遍提高。 © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

為何經濟會成長? • Colleen and Bill on an island 的例子 Agriculture and simple shelter Shifted their resources into building a more comfortable home. Physical capital has been accumulated: a better house, tools, and a water system. Human capital has been accumulated: knowledge, skills and talents. At any given time, they face limits on what they could produce. This limits were imposed by the existing state of their technical knowledge and the resources at their disposal. Over time, they expanded their production possibilities, developed new technologies, accumulated capital, and made their labor more productive. © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Economic Growth Shifts PPF (經濟成長移動生產可能疆界) A’ a 1 B’ A a 2 B b 1 © 2001 Prentice Hall Business Publishing b 2 • The production possibility frontier(生產可能疆界): shows all the combinations of output that can be produced if all society’s scarce resources are fully and efficiently employed. • Economic growth shifts society’s production possibility frontier up and to the right. Principles of Economics, 6/e Karl Case, Ray Fair

The Growth Process: From Agriculture to Industry ( 經濟成長的過程：由農業至業) • Before the Industrial Revolution in Great Britain, every society in the world was agrarian. (在大不列顛國業革命發生之前，世界各地皆處在農業社會的狀態。) • Beginning in England around 1750, technical change and capital accumulation increased productivity in two important industries: agriculture and textiles. ( 業革命均在 1750年起始於英格蘭，當時由於技術的變化和資本的累積，使得農業和紡織業的生產力大為增加。) • More could be produced with fewer resources, leading to new products, more output, and wider choice. © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

The Sources of Economic Growth (經濟成長的原動力) • An aggregate production function(總體的生產函數): is the mathematical representation of the relationship between inputs and national output, or gross domestic product. (以數學的方式表達出一國的投入生產要素與產出間的關係。) • If you think of GDP as a function of both labor and capital, i. e. , Y = A F(L, K, H) • you can see that an increase in Real GDP (Y) can come about through: 1. An increase in the labor supply, L (來自於勞動力供給的增加) 2. An increase in physical or human capital, K or H (物質資本或人力資本的增加) 3. An increase in total factor productivity, A (總要素生產力, 或稱技術變動, 的增加) © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

An Increase in Labor Supply (增加勞動力的供給) • An increasing labor supply can generate more output, but if the capital stock remains fixed, the new labor will be less productive (diminishing returns). (如果其他生產要素的投入數量不變，則隨著勞動力投入數量增加，最終將使得額外再投入一單位的勞動力，所額外帶來的產出逐漸遞減，呈現邊際報酬遞減的現象。) • 例﹕ 爸爸的廠由 10人=>11人, 產出由 1000雙鞋子=>1050雙鞋子, Q/L由 100雙鞋子 => 95雙鞋子 • Thomas Malthus and David Ricardo predicted a gloomy future as population outstripped the land’s capacity to produce. However, they forgot the impact of technological change and capital accumulation. © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Labor Productivity(生產力)= Q L Output per worker hour. © 2001 Prentice Hall Business Publishing

Economic Growth From an Increase in Labor • Growth in the labor force, without a corresponding increase in the capital stock or technological change might lead to growth of output but declining productivity. Economic Growth from an Increase in Labor – More Output but Diminishing Returns and Lower Labor Productivity PERIOD QUANTITY OF LABOR L (HOURS) QUANTITY OF CAPITAL K (UNITS) TOTAL OUTPUT Y (UNITS) MEASURED LABOR PRODUCTIVITY Y/L 1 100 300 3. 0 2 110 100 320 2. 9 3 120 100 339 2. 8 4 130 100 357 2. 7 © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Economic Growth From an Increase in Labor Employment, Labor Force, and Population Growth, 1947 – 1999 CIVILIAN NONINSTITUTIONAL POPULATION OVER 16 YEARS OLD (MILLIONS) CIVILIAN LABOR FORCE Number Percentage (Millions) of Population EMPLOYMENT (MILLIONS) 1947 101. 8 59. 4 58. 3 57. 0 1960 117. 3 69. 6 59. 3 65. 8 1970 137. 1 82. 8 60. 4 78. 7 1980 167. 7 106. 9 63. 7 99. 3 1990 189. 2 125. 8 66. 5 118. 8 1999 207. 8 139. 4 67. 1 133. 5 + 104. 1 + 134. 7 Percentage change, 1947 – 1999 Annual rate Source: Economic Report of the President, 2000, Table B-33. © 2001 Prentice Hall Business Publishing + 1. 4% + 134. 2 +1. 7% + 1. 7% 註：Labor force=employment+unemployment Principles of Economics, 6/e Karl Case, Ray Fair

Increases in Physical Capital (物質資本的增加) • An increase in the stock of capital can increase output, even if it is not accompanied by an increase in the labor force. (當其他生產要素的投入不變時，增資物質資本存量，可增加產出。) 增加capital的投入，可能會造成： (1) More Output, (2)Diminishing Returns to Added Capital, (3)Higher Measured Labor Productivity PERIOD QUANTITY OF LABOR L (HOURS) QUANTITY OF CAPITAL K (UNITS) TOTAL OUTPUT Y (UNITS) MEASURED LABOR PRODUCTIVITY Y/L 1 100 300 3. 0 2 100 110 3. 1 3 100 120 319 3. 2 4 100 130 327 3. 3 © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Increases in Physical Capital (物質資本的增加) • The increase in capital stock is the difference between gross investment and depreciation , i. e. , Capital stock = accumulated gross investment - depreciation • Capital has been increasing faster than the labor force since 1960. When capital expands more rapidly than labor, the ratio of capital to labor (K/L) increases, and this too is a source of increasing productivity. © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Increases in Physical Capital Fixed Private Nonresidential Net Capital Stock(私人部門非住宅用的物質資本存量), 1960 – 1998 (Billions of 1996 Dollars) EQUIPMENT STRUCTURES 1960 672. 5 2, 047. 7 1970 954. 2 2, 788. 3 1980 1, 988. 9 3, 646. 3 1990 2, 721. 0 4, 778. 6 1998 3, 797. 3 5, 389. 2 Percentage change, 1960 – 1998 + 464. 7 + 163. 2 Annual rate + 4. 7% + 2. 6% Source: Survey of Current Business, April 2000, computed from Tables 1 and 2, p. 21. © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Human Capital(人力資本) 人的知識和技能由受教育、受訓練或經驗中所獲得。 © 2001 Prentice Hall Business Publishing Principles of

Increases in Human Capital (增加人力資本：美國人民受教育的狀況) Years of School Completed by People Over 25 Years Old, 1940 – 1998 1940 1950 1960 1970 1980 1998 PERCENTAGE WITH LESS THAN 5 YEARS OF SCHOOL(受少於五年的教育) 13. 7 11. 1 8. 3 5. 5 3. 6 NA NA PERCENTAGE WITH 4 YEARS OF HIGH SCHOOL OR MORE(高中以上者) 24. 5 34. 3 41. 1 52. 3 66. 5 77. 6 82. 8 PERCENTAGE WITH 4 YEARS OF COLLEGE OR MORE(大專以上者) 4. 6 6. 2 7. 7 10. 7 16. 2 21. 3 24. 4 NA = not available. Source: Statistical Abstract of the United States, 1990, Table 215; and 1999, Table 263. 1990, © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Increases in Productivity (增加生產力) • Growth that cannot be explained by increases in the quantity of inputs can be explained only by an increase in the productivity of those inputs. (未能以投入要素的數量增加來解釋成長的部份，將之解釋為是由生產力增加才造成的成長。) • Factors that affect the productivity of an input include technological change, other advances in knowledge, and economies of scale. (每種投入要素皆有其生產力，影響投入要素生產力的因素包括科技的變動，知識的增進和規模經濟等。) © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Productivity的衡量方式 1. Labor Productivity(生產力)：output per worker hour. 2. Total factor Productivity(總要素生產力) Y=A F(L，K，H) Y表GDP(output) A表總要素生產力 L表勞動力 K表物質資本 H表人力資本 © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

科技變化促使生產力提升 • Technological change affects productivity in two stages: • • • Invention(發明)：First there is an advance in knowledge, or an invention. (例如：愛因斯坦的相對論。) Innovation(創新)：The use of new knowledge to produce a new product or to produce an existing product more efficiently. There are capital-saving innovations, and labor-saving innovations. (創新有可分為兩種：節省資本的創新和節省勞動力的創新。) © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Economics of scale (規模經濟促使生產力提升) • Economics of scale(規模經濟)隨著公司的生產量增加，長期平均總成本下降的特性。 • 規模經濟促使生產力提升的原因有許多種，例如：公司若設立一個新廠，若其地點可進一步減低運輸成本；研發的支出和在職訓練的方案，也可因為公司規模加大而使平均研發和在職訓練的成本下降。若平均總成本下降，則平均$1的投入所產生的產出就高。 © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Other influences on productivity (其他影響生產力的因素) • 近年來，政府為了保護環境，以法規要求廠商減低對空氣和水的污染，廠商為了達到政府的要求，將其部份資本與勞動用於減輕污染上，因此，減低了衡量出的生產力。 • 近年來，政府為了保護勞的安全和健康，也以法規要求廠商要增加對勞發生意外的防範，和健康的保險，廠商為了達到政府的要求，將部份的生產要素投入於對勞的安全和健康的保護，因此也減低的衡量出的生產力。 © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Growth and Output in the United States (美國的成長和產出) Growth of Real GDP in the United States, 1871 – 1999 PERIOD AVERAGE GROWTH RATE PER YEAR 1871 -1889 5. 5 1950 -1960 3. 5 1889 -1909 4. 0 1960 -1970 4. 2 1909 -1929 2. 8 1970 -1980 3. 2 1929 -1940 1. 6 1980 -1990 3. 2 1940 -1950 5. 6 1990 -1999 3. 1 Sources: Historical Statistics of the United States: Colonial Times to 1970, Tables F 47 -70, F 98 -124; U. S. Department of Commerce, Bureau of 1970, Economic Analysis. © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Growth and Output in the Selected countries Growth of Real GDP in the United States and Other Countries, 1981 – 1998 COUNTRY United States Japan Germany France Italy United Kingdom Canada Africa Asia (excluding Japan) AVERAGE GROWTH RATE PER YEAR 3. 1 2. 8 2. 1 2. 0 1. 8 2. 4 2. 5 7. 3 Source: Economic Report of the President, 2000, computed from Table B-110. 2000, © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Sources of Growth in the U. S. Economy, 1929 – 1982 (美國經濟成長的來源) 註：the Great Depression發生在 1929~1935，一次世界大戰 1914~1918；二次世界大戰 1939 - 1945，第一次石油危機 1973。 Sources of Growth in the United States, 1929 – 1982 PERCENT OF GROWTH ATTRIBUTABLE TO EACH SOURCE 1929 – 1982 1929 – 1948 – 1973 – 1979 53 49 45 94 Labor 20 26 14 47 Capital 14 3 16 29 Education (human capital) 19 20 15 18 Increases in productivity 47 51 55 6 Advances in knowledge 31 30 39 8 Other factorsa 16 21 16 -2 Increases in inputs Annual growth rate in real national income 2. 8 2. 4 3. 6 a. Economies of scale, weather, pollution abatement, worker safety and health, crime, labor disputes, and so forth. Source: Edward Denison, Trends in American Economic Growth, 1929 – 1982 (Washington: Brookings Institution, 1985). © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair 2. 6

Labor Productivity, 1952 – 2000 (勞生產力) 註：第一次石油危機發生在 1973，第二次石油危機在 1981。 © 2001 Prentice Hall

Labor Productivity, 1952 – 2000 • Some of the explanations for the slowdown in productivity growth in the 1970 s include: • a low rate of saving • increased environmental and government regulations • lack of spending in R&D • high energy costs • However, many of these factors turned around in the 1980 s and 1990 s yet productivity growth remained low. © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Economic Growth and Public Policy (經濟成長和公共政策) • Policy provisions to improve the quality of education include the new Education Individual Retirement Account that allows savings to earn tax free returns as long as the balance is used to pay for educational expenses. • Policies to increase the saving rate include individual retirement accounts that accumulate earnings without paying income tax. © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Economic Growth and Public Policy • The amount of capital accumulation is ultimately constrained by its rate of saving. • The tax system and the social security system in the United States are biased against saving. • Some public finance economists favor shifting to a system of consumption taxation rather than income taxation to reduce the tax burden on saving. © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

Economic Growth and Public Policy • Other public policies to stimulate economic growth include: • policies to stimulate investment • policies to increase research and development • reduced regulations • industrial policy, or government involvement in the allocation of capital across manufacturing sectors. © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

The Pro-Growth Argument (贊成成長的理論) • Advocates of growth believe growth is progress. • New technologies and production methods lead to new and better products. Capital accumulation and new technology improve the quality of life. • In 1995, real GDP per capita was more than twice what it was in 1950. Since the 1950 s, incomes have grown twice as fast as prices. © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

The Pro-Growth Argument • Advocates of growth believe growth is progress. • Growth gives us more choices. • New technologies and production methods lead to new and better products. Capital accumulation and new technology improve the quality of life. • Since the 1950 s, incomes have grown twice as fast as prices so we can buy that much more. © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

The Pro-Growth Argument • Growth saves the most valuable commodity—time. • Growth also improves the quality of things that yield satisfaction directly. • Growth produces jobs and higher incomes. With higher incomes we can better afford the sacrifices needed to help the poor. • When population growth is not accompanied by growth in output, unemployment and poverty increase. © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

The Anti-Growth Argument (反成長的論點) • Growth has negative effects on the quality of life. • Growth encourages the creation of artificial needs. • Growth means the rapid depletion of a finite quantity of resources. • Growth requires an unfair income distribution and propagates it. © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair

中華民國經濟成長(按1996年價格計算) 年別 GDP(NT$ million) 經濟成長率(%) 平均每人所得(%) 每人所得成長率(%) 1951 187, 591 - 21, 982 1963 474, 423 9. 35 37, 685 7. 26 1964 532, 300 11. 20 41, 380 9. 80 1965 591, 569 11. 13 43, 873 6. 02 1966 644, 293 8. 91 46, 608 6. 24 1967 713, 307 10. 71 50, 293 7. 90 1968 778, 724 9. 17 53, 630 6. 64 1969 848, 408 8. 95 57, 539 7. 29 1970 944, 878 11. 37 62, 516 8. 65 1971 1972 1, 066, 722 1, 208, 783 12. 90 13. 32 68, 834 76. 301 10. 11 10. 85 1973 1, 363, 900 12, 83 84, 128 10. 26 © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e - Karl Case, Ray Fair

中華民國經濟成長(按1996年價格計算) 年別 GDP(NT$ million) 1974 1, 379, 747 1. 16 82, 264 -2. 22 1975 1, 447, 748 4. 93 83, 989 2. 10 1976 1, 648, 416 13. 86 94, 072 12. 00 1977 1, 846, 383 10. 19 101, 044 7. 41 1978 2, 063, 299 13. 59 110, 999 9. 85 1979 2, 231, 953 8. 17 118, 256 6. 54 1980 2, 394, 914 7. 30 122, 379 3. 49 1981 2, 542, 505 6. 16 125, 263 2. 36 1982 2, 632, 796 3. 55 128, 310 2. 43 1984 2, 855, 186 3, 157, 823 8. 45 10. 60 137, 050 150, 769 6. 81 10. 01 1985 3, 314, 214 4. 95 156, 783 3. 99 © 2001 Prentice Hall Business Publishing 經濟成長率(%) 平均每人所得(NT$) 每人所得成長率(%) Principles of Economics, 6/e Karl Case, Ray Fair

中華民國經濟成長(按1996年價格計算) 年別 GDP(NT$ million) 經濟成長率 (%) 平均每人所得 (NT$) 每人所得成長率(%) 1998 8, 565, 134 4. 57 368. 685 4. 38 1999 9, 029, 704 5. 42 379, 533 2. 94 2000 9, 558, 698 5. 86 389, 637 2. 66 2001 9, 523, 039 -0. 37 389, 122 -0. 13 資料來源：行政院主計處國民所得統計(2002)。 © 2001 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair