Page 515 - The Principle of Economics

PRODUCTION AND GROWTH
When you travel around the world, you see tremendous variation in the standard of living. The average person in a rich country, such as the United States, Japan, or Germany, has an income more than ten times as high as the average person in a poor country, such as India, Indonesia, or Nigeria. These large differences in income are reflected in large differences in the quality of life. Richer countries have more automobiles, more telephones, more televisions, better nutrition, safer hous- ing, better health care, and longer life expectancy.
Even within a country, there are large changes in the standard of living over time. In the United States over the past century, average income as measured by real GDP per person has grown by about 2 percent per year. Although 2 percent might seem small, this rate of growth implies that average income doubles every 35 years. Because of this growth, average income today is about eight times as high as average income a century ago. As a result, the typical American enjoys much
IN THIS CHAPTER YOU WILL . . .
See how economic growth differs around the world
Consider why productivity is the key determinant of a country’s standard of living
Analyze the factors that determine
a country’s productivity
Examine how a country’s policies influence its productivity growth
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