Transcript Economic Growth

Economic Growth
Dillion Rath
Bahjat Abuhadba
Jessica Smith
Compounded interest
Compounded
interest: is the
concept of adding
accumulated
interest back to the
principal, so that
interest is earned on
interest from that
moment on.
N
1 Year
2 Semi
4
12
52
365
continuous
P
$ 10600.00
$ 10609.00
$ 10613.64
$ 10616.78
$ 10618.00
$ 10618.31
$ 10618.37
The Power of
Compounded Rates
People often underestimate the power
of compounded interest
Within a reasonable amount of time an
investment earning compounded
interest
will accumulate a large percentage of
the original investment
Compounding principles can be applied
to growth rates
Facts To Consider
Many countries such as China who started
from far behind experienced super normal
growth that exceeded 6%
The real challenge is to maintain a stable and
consistent growth rate for the long run
In industrialized countries this sable rate is
often estimated at 2-4% annually
Growth in Income
Formula
Calculating the amount of time it will
take to double something is calculated
as follows:
72 / Growth Rate = time to double in Yrs
Ex: India’s Growth @ 1.8%
72/1.8 = 40Yrs for India’s economy to
double
Growth and Recipes
Economic growth
occurs whenever
people take resources
and rearrange them in
ways that are more
valuable

Exp. Kitchen
Cooking is limited by
the supply of
ingredients
Majority of cooking
produces undesirable
side effects
Growth and Recipes
Can’t be achieved
by doing more and
more of the same
kind of cooking
Eventually run out of
raw materials and
suffer from pollution
and nuisance
How does Economic
Growth Occur?
Better recipes
Produce fewer unpleasant side effects
and generate more economic value per
unit of raw material

Exp. Coffee
How does Economic
Growth Occur?
Big Discoveries

Antibiotics, Electric Motor
Million of little discoveries double
average income in a nation
Millions of undiscovered ideas that don’t
add up, but they multiply
What’s left to discover?
Periodic Table
100 x99 x 98 x 97
= 94,000,000
combinations
6 ,2, 1, 7 different
proportions = 3,500
94,000,000 x 3,500
= 330 Billion Recipes
1,000 per day = millions
of years to evaluate
Objects and Ideas
Topics
Economic growth due to new ideas
Benefits of importing/exporting
Foreign investments from firms
The transistor movement
Investments for new discoveries
Innovation and Meta
Ideas
Innovation: performance and growth through
improvements in efficiency, productivity,
quality, competitive positioning, market
share, etc.
Meta-Ideas: Ideas that support the
transmission of other ideas
Innovation and Meta
Ideas
Example of Meta-Ideas:
The patents and copyrights the British
invented.
The modern research university north
Americans invented
These ideas came to support human
innovation and creativity.
Facts to Consider about
Meta-Ideas
No matter how many ideas are out
there; many others are still
undiscovered.
In today’s global environment; any new
product or innovative idea is welcomed
Many ideas have turned it’s developers
to overnight entrepreneurs