Chapter outline Reminders on GDP and growth I) The origins of growth A) The factors of growth (from 1min10) How does the theory of extensive growth explain the emergence of growth? What is the law of diminishing returns? Does Robert Solow observe this law of diminishing returns? Does Robert Solow explain growth via the theory of extensive growth? For Robert Solow, what is the main factor of economic growth? Why? What is an innovation? What are its different forms according to Schumpeter? How is total factor productivity (TFP) measured and what can be used to measure it? What is the difference between extensive growth and intensive growth? B) How can technical progress be explained? (from 8min20) Where does technical progress come from when it is said to be exogenous? Where does technical progress come from when it is said to be endogenous? Why is government spending on Research and Development (R&D) important to foster innovation? How do entrepreneurs contribute to the emergence of innovation? Why are entrepreneurs encouraged to innovate according to Schumpeter? Why is government investment in human capital important to foster innovation? C) The role of institutions in growth (from 16min30) What is an institution for Douglass North? What rule of law is essential for growth? Why? What rule of law particularly encourages innovation? Why? What can an effective tax system finance? What political structures can harm growth? What social norms can promote productivity and growth? What is a failing institution for Kydland and Prescott? What are the solutions to remedy it? II) The limits of growth A) The impact of technical progress on unemployment and income inequality (from 24min53) 1) What is creative destruction according to Schumpeter? 2) Why does creative destruction generate an upward phase of growth according to Schumpeter? 3) What does creative destruction then generate according to Schumpeter? 4) Are job destructions necessarily greater than job creations during the creative destruction process? 5) Why do innovations widen inequalities "from above"? 6) Why do innovations create territorial inequalities? 7) What is job polarization? 8) In which cases is innovation substitutable for the labor factor? What are the consequences for these jobs? 9) In which cases is innovation complementary to the labor factor? What are the consequences for these jobs? B) The impact of growth on the environment (from 35min) 1) What did the Meadows report indicate in 1972? 2) What is natural capital? And a negative externality? 3) Why are they responsible for climate change? 4) What did the Brundtland Report of 1987 indicate? 5) What are the consequences of these reports in terms of international actions? 6) Who is behind the theory of weak sustainability? What is the condition for creating sustainable growth according to them? 7) How should natural capital be managed according to the theory of strong sustainability? Why? 8) In both cases, why are innovations important for creating sustainable growth?