Productivity: the Key to Increasing a Country’s Income

1. Why are some nations poor and some wealthy? Wealthy nations produce (per capita) more goods and services

2. Define productivity. Productivity = output ÷ input Measures how much output (goods & services) is produced compared to input (productive resources) used

3. Mr. Navarro owns a 10 acre corn farm in Mexico 3. Mr. Navarro owns a 10 acre corn farm in Mexico. He gets 52 bushels of corn from each acre of land. a) What is the overall corn output of this farm? 520 bushels of corn b) What are some of the inputs Mr. Navarro used in his corn production? Land, water, labor, capital equipment (plow, combine, etc.) c) What is the corn productivity of his farm? 52 bushels per acre

3. Mr. Navarro owns a 10 acre corn farm in Mexico 3. Mr. Navarro owns a 10 acre corn farm in Mexico. He gets 52 bushels of corn from each acre of land. d) Give a numerical example of an increase in productivity on this farm. Anything greater than 52 bushels per acre would be an increase in productivity e) Describe 3 specific ways that Mr. Navarro could increase the productivity of his corn production. Better seeds, better equipment, fertilizer, more knowledge of farming from training/education, harder work, installation of an improved irrigation system

4. True or False? a) “When one country becomes wealthier, another country becomes poorer.” False b) “Countries are poor mainly b/c they lack natural resources.” c) “A large population cause a country to be poor.”

MAIN IDEAS - 3 main ways to increase productivity (GDP) Increase amounts of Capital Resources – workers must have enough tools (ex. hands vs. shovels) Improvements in Technology – better tools (ex. shovel vs. tractor; camel vs. truck) Improvements in Quality of Labor (human capital) – education & training increases a worker’s skills (ex. nurse vs. doctor; substitute vs. teacher)

Comparing Education Levels & GDP PART 2 Comparing Education Levels & GDP

Part A Identify 5 low-income 5 middle or high-income countries

1) What patterns or relationships do you see in your data? Explain. Education levels & per capita GDP have a direct relationship Countries with very low percentages of secondary education enrollment tend to have low levels of per capita GDP Countries with high percentages of secondary education enrollment tend to have higher levels of per capita GDP

2) Why do you think it is difficult raising the educational levels of people living in low-income countries? It is difficult because education is costly – it requires scarce productive resources. Also in some situations, people in poorer countries may not value education as much as in wealthier countries. For example, parents may want their children to help with farming or the family business instead of getting a formal education.

3) Pick a country from your map 3) Pick a country from your map. Give them 3 pieces of advice on how to raise their productivity, and therefore their GDP. Increase Capital Resources – workers must have enough tools Improve Technology – better tools Improve Quality of Labor (human capital) – education & training increases a worker’s skills