Objectives:
To understand the sources of economic growth.

Teaching Notes:
The major factors in economic growth are growth in the country's level of capital stock relative to its work force, increases in human capital and technological progress. Thus the workforce becomes more productive and the economy can produce more goods and services from its pool of natural resources.

Focus Activity:
Students will examine the factors of growth present in their own country and compare those to other countries.

Directions:
1. Divide the class into groups of 4-6 students.
2. Give the group historical data on capital formation and the average level of education by groups over time.
3. Ask the students to examine the data for trends in these variables.
4. Ask the students to list as many technological improvements as they can in 5 minutes (or less depending on time available) and to relate these improvements to the growth of the economy.
5. Compare and contrast the data from their country to other countries (this can be done in groups or by the teacher to the class as a whole) to see where their country is relative to others in the growth process. Use both fast and slower growing economies for examples.

Questions:
1. In what areas could our country improve it's growth potential? What are ways we could accomplish this?
2. In what areas has our country been relatively successful in developing its growth potential? What are the causes of this success?

Answers to Questions:
1. The answers to the first part will depend on the country. The second part should be related to policies or changes in behaviors by the groups involved.
2. The first part will be country-specific. The second part will relate to attitudes, policies or possibly resource factors.

Extensions and variations:
1. Discuss the issues of productivity in more depth, including elements of the quality of the workforce, the size of the workforce and the capital/labor ratio.
2. Use a wider variety of countries for comparison.

Suggested texts and Supplemental Resources:
1. Nearly every economics principles text will cover these elements of growth.
2. See World Bank publications to look at changes in the growth variables across various geographic regions.

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Objectives:
To identify and understand the roles that saving and investment play in economic growth.

Teaching Notes:
The growth in capital stock depends on the level of gross investment and the amount of depreciation in the capital stock. Investment in capital stock is "financed" by saving by the private sector.

Focus Activity:
This activity will look at saving rates throughout the world. The students will compare the saving rates in their country with those in others. Then the students will develop methods to increase the saving rate in their country and examine the limitations of saving relative to growth.

Directions:
1. Divide the class into 8-10 groups of students. Each group will be responsible for one nation.
2. Give each group data on saving rates for a particular country in the world, including their own native country for one group. The data can be over time or just current data. Use 8-10 countries with different rates of growth, different size, region, etc.
3. Ask the students to determine the standing for the country for which they are responsible in order of high to low saving rates and also for growth rates. Compare and contrast the order of the countries on the two lists.
4. Have the students list 3-5 reasons for the placement of their country on the list.
5. Then have the students list 3-5 methods for increasing the saving rate in their country.
6. Have the students list 3-5 benefits and 3-5 costs of increasing the saving rate in their country.

Questions:
1. Are the two lists of countries from step 3 in the same order? Why or why not?
2. Why does your country place where it is on the list?
3. How can we increase savings rate?
4. Who or what groups benefit from increased saving and who or what groups are harmed?
5. Will unlimited increases in saving lead to unlimited increases in economic growth? Why or why not?

Answers to Questions:
1. The lists will not likely be in the same order because the level of saving and thus capital formation will be more effective for increasing growth in some countries than for others depending on the current level of the capital/labor ratio. The higher this level, the less effective the capital formation will be. Also, we have not taken into account the other factors that could influence growth (ceteris paribus issue).
2. Look at specific country factors, such as value on saving, income distribution, lower or higher absolute levels of income, etc.
3. Saving rates can be affected by the level of interest rates, the tax incentives/disincentives to save and other country-specific factors. Policies designed to influence these factors should be in the answers to this question.
4. Consumer products will be consumed less if the citizens save more (more future consumption, however). Groups involved in capital formation activities and financial intermediaries will likely benefit.
5. As saving increases and the level of investment increases, so does the level of depreciation. The growth in the capital stock is not as great.

Extensions and variations:
1. Students could spend more time looking at exactly what types of investment is occurring in each specific country (types of capital goods, human capital advances, infrastructure).

Suggested texts and Supplemental Resources:
Most economics principles texts will cover these issues. Statistics are available from the World Bank and other international economic agencies.

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Objectives:
To examine the role international trade plays in the process of economic growth.

Teaching Notes:
Research over the past 30 years has shown that economic performance is greater in poor to middle-income countries if the country has an "outward orientation" rather than an "inward orientation." In the former, the country opens its market to the rest of the world and promotes its exports. In the latter, the country erects significant barriers to trade and concentrates its resources on the development of domestic industry.

Focus Activity:
In this activity the students will attempt to determine whether their country has an "outward" or "inward" orientation by examining lists of trade restrictions currently in place. They will compare their country to a variety of others (some developed, but mostly poor and middle-income countries) to see what degree of orientation is present in these countries. They will then hypothesize about the effects of this orientation on their own country and other country's growth potential.

Directions:
1. Divide the class into groups of 4-6 students.
2. Give each group data on levels of imports and exports, per capita GDP and trade restrictions imposed by a variety of countries, including their own.
3. Have the groups classify each country as "outward" or "inward," giving specific reasons (2-3) why the country was classified as it was.
4. Have them rank the countries in order of growth potential based on the orientation lists.
5. Now provide them with a list of the growth rates for the countries involved. Have them compare their estimates with the actual growth rates and have them give reasons for any differences.

Questions:
1. What led you to rate each country as you did? Why did groups differ in their ratings and explanations?
2. Does the outward/inward orientation do a good job in explaining the growth rates of developed countries? Of poor countries? Of middle-income countries? Explain why the orientation may differ for each group of countries?
3. Why does having an outward orientation lead to higher growth rates?

Answers to Questions:
1. Students should look at the size of trade and the degree of restrictions. Groups will differ on which factor should be weighted heavier.
2. The process should be more accurate in predicting growth rates for poor and middle income countries, but much less reliable for developed countries. Developed countries have more mature industries and their growth patterns are much more stable and established. The lesser developed countries have much more room for expansion that opening the economy can produce.
3. Outward orientation may indicate better macroeconomic performance and policies by the government, including stable exchange rates and interest rates, both of which influence trade. Outward orientation means that domestic companies are in closer contact with companies in developed countries with more advanced technology, which can be transferred more easily to the poorer country. If the country has an open policy, there is more competition for the domestic industry which is then forced to become more productive to stay competitive.

Extensions and variations:
Use specific countries that the students may be studying in a geography unit.

Suggested texts and Supplemental Resources:
1. See Anne Krueger Foreign Trade Regimes and Economic Development: Liberalization Attempts and Consequences. National Bureau of Economic Research. New York, Ballinger. 1978.
2. The World Bank also reports on openness data.

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Objectives:
To examine the benefits and costs of economic growth; to distinguish between economic growth and economic development.

Teaching Notes:
Growth centers on the quantitative aspects of change in an economy, given primarily in growth rates of real GDP per capita. Development refers to qualitative changes in the nature of the society, such as the quality of life and the types of goods available for consumption.

LDCs can facilitate growth and development if they eliminate government restriction on business activity, provide incentives to adopt of modern agricultural technology, improve the country's infrastructure to allow businesses and agriculture to use modern technologies more efficiently, develop adequate health care and educational systems and institute policies to reduce population growth and increase saving.

Focus Activity:
The students will examine the positives and negatives of growth. They will also compare quality of life issues (environment, personal freedoms, etc) between developed and less developed countries. Finally they will look at the difficulties facing less developed countries as they attempt to increase economic growth.

Directions:
1. Divide the class into 8-10 groups of students. Give each group materials and resources (including statistcs) on a particular country other than their own. Each group gets materials on a different country.
2. Have the students list 5-7 benefits each to growth in general and to their chosen country specifically.
3. Have them list 5-7 economic costs to growth in general and to their chosen country specifically.
4. Have the students compare and contrast their lists between developed and less developed countries. Ask if they can find any qualities that may be better in a lesser developed country than a more developed country.
5. Have the students identify the necessities for growth (discussed above) present and absent in their native country and in the countries surrounding their homeland. Also have them identify these necessities in both lesser developed and more developed countries. (use specific countries).

Questions:
1. What are some examples in your selected country where economic growth and development have had negative impacts on the environment? On the crime rate? On personal freedoms? Could these problems have been avoided? Why or why not? If yes, how?
2. What problems have you seen in your own native country as a result of economic growth?
3. What are some (5-10) benefits of growth to your chosen country? To countries lesser developed? To countries more developed?
4. How has your own native country handled all of the issues given in the teaching notes above? How have the benefits of growth balanced the problems? Looking at your neighboring countries, how have they handled these issues?
Answers to Questions:
1. The students should look at pollution, deforestation and other similar environmental concerns. With the increased urbanization typically comes increases in crime. More restrictions and higher taxes may coincide with substantial growth. Planning more deliberately by the government could ease some of these problems. Other answers could be considered as well.
2. See answer 1 above.
3. Benefits would include more goods and services and a higher standard of living. High growth rates may be more critical to lesser developed countries than developed ones because the former have so far to grow to approach the level of the developed countries.
4. The list of the necessities achieved will vary by country. They should examine their health care system, the educational system, etc. for strengths and weaknesses.

Extensions and variations:
Concentrate on specific regions of the world to examine positives and negatives to growth (tie this into a geography lesson, for example). Students can produce annotated maps of their chosen country (with notes on the benefits and problems of growth) which can be placed together on a map of the world in the classroom.

Suggested texts and Supplemental Resources:
Look at books on environmental economics and sustainable development.

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If there are an questions about the project please contact John Strudwick at: tel: (978) 749 4541; fax: (978) 749 4542.
e-mail: John Strudwick
or by mail to Phillips Academy, Andover, MA 01810, USA.