Fundamental Drivers of Growth

Question 1

Describe how Geography drives growth

Answer 1

Access to trade routes via river and ocean
Spread of Illness - related to per capita income

Question 2

Describe how Geography is limited as a growth driver

Answer 2

Invariant and dependant on tech
Large variations by geography
Large variations over time in the same geography

Question 3

Describe how culture is limited as a growth driver

Answer 3

Often the precictions are wrong and racist
Limited in ability to explain changes in growth rates

Question 4

State behaviours of Institutions

Answer 4

Determined by individuals of society

Places restraints on behaviour

Shapes behaviour with incentives

Question 5

State some examples of institutions

Answer 5

Liberal Democracy
Private property rights

Question 6

Define Extractive institutions

Answer 6

Institutions designed to protect small minorities

Question 7

Describe the effect Extractive institutions have

Answer 7

Limit Growth:
Pursue economic policies beneficial to small minorities
Protect incumbents and resist creative destruction

Question 8

Describe technologies effect with institutions

Answer 8

Incentives to undertake risky innovation
Creative destruction

Question 9

Describe the effect Inclusive institutions

Answer 9

Essential for growth:
Places constraints on rulers
Give voices to new economic voices
Enforce property rights

Question 10

Define policies

Answer 10

Economic reforms can make a big difference in growth rates

Question 11

Describe 5 policy areas that are very critical to growth

Answer 11

Institutions - markets with sensible regulation, property right,
Openness - to ideas, people trade, tech transfer
Physical Capital
Human Capital
Good Macro policies