CH. 15: ECONOMIC GROWTH AND

PRODUCTIVITY

CIE3M1

M. Nicholson

Economic Growth In Canada

Canadians enjoy a much higher standard of living with many more goods & services available today then in the past.

The key reason is economic growth caused by increased productivity.

Economic Growth In Canada

What is economic growth? increase in a country’s (region’s) output or goods & services over a period of time shown by the rate of increase in the real Gross Domestic Product (GDP) per person

Economic Growth In Canada

Real means adjusted for inflation and per person gives a more accurate picture of the wealth of the country

E.g. India has a much larger GDP than Kuwait, but has a much smaller GDP per capita

Economic Growth In Canada

Standard of living GDP per person has two major weaknesses when used to show the wealth of a country

1. items that increase GDP but do not improve the standard of living (e.g. increased crime)

2. excluded items that improve the standard of living (e.g. leisure, homemaking)

Economic Growth In Canada

1.      Leisure2.      Omitted goods & services3.      Side effects4.      Underground economy5.      Kinds of goods produced6.      Distribution of income

Economic Growth In Canada

Economic growth and the production possibilities curve

Economic Growth In Canada

Economic growth since 1900 – since 1900 GDP has grown more than five-fold

Causes of economic growth – increased productivity (output per person)

Economic Growth In Canada

1. Specialization Division of labour Advantages: time-saving, rising standard

of living Disadvantages: loss of pride in

craftsmanship, growing dependency

Economic Growth In Canada

2. Technological progressa) Better ways of organizing production

mass production, automation, work study

b) Development of new machineryc) New types of products

Economic Growth In Canada

3. Increase in the amount and quality

of education4. Increase in the amount of capital

available

The Staples Thesis

Economic historian Harold Innis throughout Canadian history the development of certain primary products have had a major impact on economic growth (e.g. 16th C. fish / 17th & 18th C. beaver pelts / 19th C. timber & wheat / 20th C. wheat, pulp & paper, minerals, oil & natural gas)

Economic Growth

Benefits and costs of growth higher material standard of living with increased life expectancy

BUT increased stress because of constant change & rapid pace of life along with pollution & decreased resources

Economic Growth

Unequal economic growth in Canada with Ontario, Alberta, BC having high growth while the Atlantic provinces have low growth

Economic Development In Other Countries

Low income economies Gross National Product (GNP) per person < $635 US 60 % of the world in 1991 (e.g. China, India, Sub-Saharan Africa)

Middle income economies GNP per person $636 – $7910 US (e.g. Poland, Thailand, Brazil)

High income economies GNP per person > $7910 US (e.g. Canada, Germany, Japan)