Johnny Ch Lok

Economic Theories Solve Business Problems Johnny Ch Lok

Artificial intelligent technological invention raise productivities to bring China less developed country efficient benefits in factories case. After technological progress was incorporated into the growth model, we could essentially split labor up between efficiency of the workforce. Workers in the less developed country, China will may apply robotics to assist workers to raise any products manufacture number increases in short time.?New Growth Theory (Romer & endogenous growth) How is it possible for income inequality to increase within countries and across countries, but to decrease for the world as a whole?The answer is long-run economic growth". Specifically, income per capita in China and India has grown rapidly over the last half century. So even though inequality has increased within China and India, this growth has led the living standards for hundreds of millions of people to converge towards those in Europe, North America, and Australia. This convergence is nothing to fear. Economic growth is not a zero-sum-game. But what drives this growth? The source of growth is probably not what you think it is. Variation in standards of living across countries is clearly associated with different amounts of physical capital such as public infrastructure. So should we simply invest more in more roads and bridges to increase our standard of living?The problem is that physical capital only explains about one-third of the variation in income per capita across countries. The other two-thirds are "explained" by a more nebulous concept that economists refer to as total factor productivity, or TFP for short. I have to put quotes around "explained" because we can only measure TFP as the residual component of income per capita not explained by capital. The point is that massive investment in infrastructure would only ever get even the poorest country one-third of the way to catching up with rich countries. Worse yet, capital accumulation is subject to diminishing returns for all countries. In fact, income per capita would increase with the amount of machinery and equipment per worker, but nowhere near proportionately. Rather than an easy path to prosperity, capital accumulation quickly becomes a lot like squeezing blood from a stone.