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Chapter 6
Economic Growth and Trade
Learning target
After learning this chapter, you should be able to:
Know about the Concept and Classification of Economic Growth
Understand the Rybczyński theorem, the mechanism of "Dutch disease", and the conditions for impoverishing growth
Understand the different trade and welfare effects of export-biased growth and import-biased growth
Know about the impact of AI on economics and trade
Know about the main distortions in the process of economic growth in developing countries
Understand four mechanisms by which trade affects economic growth in developing countries
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Main content
Concept and Classification of Economic Growth
The impact of Factor Growth on Trade
The Impact of Technical Progress on Trade
The Impact of Trade on Economic Growth in Developing Country
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Classification of Economic Growth
1. Concept of Economic Growth
2. Classification of Economic Growth
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1. Concept of Economic Growth
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Theoretical stage Classical growth theory Neoclassical growth theory New growth theory
Time span Late 18th century - 1940s 1950s - mid 1980s Mid 1980s‐
Representative figure Adam Smith
Thomas Malthus
Karl Marx Robert Solow
Paul Romer
Robert Lucas
Robert Barro
Main points The division of labor, capital accumulation, and technological progress are the primary drivers of economic growth. Economic growth cannot be sustained without either population growth or technological progress. Human capital investment promotes the internalization of technological progress and achieves sustainable economic growth.
2. Classification of Economic Growth
(1)Biased Economic Growth
Import-biased economic growth
Export-biased economic growth
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2. Classification of Economic Growth
(2)Unbiased Economic Growth
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Unbiased economic growth refers to a growth mode in which the boundary of the production possibility curve shifts outward as a whole during an economic expansion, which does not lead to a change in the shape of the production possibility curve