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Makes living standard vary widely from country to country |
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How rapidly real GDP per person grew in the typical year |
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Quantity of goods and services produced from each unit of labor input |
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Why productivity is so important |
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Key determinant of living standards because an economy’s income is the economy’s output |
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Determinants of productivity |
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physical capital, technology, human capital, and natural resources |
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stock of equipment and structures used to produce goods and services |
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includes common knowledge, proprietary, and propreietary for a short time |
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Knowledge and skills that workers acquire through education, training, and experience It is the resources expended in transmitting technology to the labor force |
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leads to higher level of income and productivity but not growth in either |
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Foreign direct investment |
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Capital investment that is owned and operated by a foreign entity |
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Foreign portfolio investment |
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Investment financed with foreign money but operated by domestic residents |
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Poor countries inward oriented
rich countries outward oriented |
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reduces GDP per worker but promotes technological progress |
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