This chapter analyzes economic growth by examining the aggregate production function. Sources of economic growth are identified and growth rates of different countries are compared.
Determinants of Economic Growth
- The main sources of growth for the United States from 1948 to 2007 were divided between increases in the quantities of labor and of physical capital (about 65%) and in improvements in the qualities of the factors of production and technology (about 35%). Since 2000, however, improvements in factor quality and technology have contributed to about half the economic growth in the United States.
- There has been a growing disparity in the rates of economic growth in industrialized countries in recent decades, which may reflect various differences in economic structures and policies.