You can read long run causes of comparative development. In North and Thomass view the fundamental explanation of comparative growth is differences in institutions. The long-run growth is determined by percentage of change in the real gross domestic product GDP. Factor accumulation and innovation are only proximate causes of growth. Check also: comparative and long run causes of comparative development Long-Run Causes of Comparative Development Physical geography o Some say that this has little impact on development though landlocked status is certainly an impediment to growth Institutional quality - colonial and post-colonial Institutions have been defined as the rules of the game of economic development by Nobel laureate Douglass North o Unfavourable institutions.
In order for an economy to experience positive long-run growth its outputs and inputs must be in balance for an increase to occur in supply demand revenue and employment. The major emphasis is placed on what has been learned recently about the role of institutions in relation to other factors through the use of centuries rather than decades of data.
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They are growth italics in original.
The long-run economic growth is determined by short-run economic decisions. 10the main cause of variation in institutions. 7A Long-Run Exchange Rate Model Based on PPP Ongoing Inflation Interest Parity and PPP Money supply growth at a constant rate eventually results in ongoing inflation ie continuing rise in the price level at the same rate. The underlying causes that have allowed some countries to attain high income levels and have kept others at lower echelons have been debated at least since Adam Smith published his seminal work on the growth of nations. Changes in this long-run inflation rate do not affect the full-employment output level or the long-run relative. Cation capital accumulation etc are not causes of growth.
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What Drives Long Run Economic Growth The underlying causes that have allowed some countries to attain high income levels and have kept others at lower echelons have been debated at least since Adam Smith published his seminal work on the growth of nations.
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