Michael Spence's Article Why China Grows So Fast?

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This short paper will examine Michael Spence’s article, “Why China Grows So Fast,” printed in the December 23th, 2007 edition of the Wall Street Journal. In this paper I show that Spence’s article about how is it very important to understand the economic growth and the production function that have led Chine to grow economically fast. In addition, in this paper I show how an economy’s gross domestic product (GDP) in China is increasing due to their huge labor force and population. Also, in 1978, China’s labor has switched from Communism “make work” to Capitalism “productive positions” by the politician and reformist leader of the Communist party of china Deng Xiaoping, so that has led the country towards a market economy. So these were the …show more content…
In this section, I briefly summarize macro-theory. According to Mankiw, buyers represent the demand curve (downward slope) and sellers represent the supply curve (upward slope). Besides these two basic economic concepts, chapter twelve focuses on the production function and the growth. Where an economy’s gross domestic product (GDP) measure both the total income earned in the economy and the total expenditure on the economy’s output of goods and services. So economists use production function to describe the relationship between the quantity of inputs used in production and the quantity of output from production. As Y stands for real GDP, L stands for hours worked, H stands for human capital, K stands for physical capital, N stands for natural resources, A stands for technology, and F is a mathematical function. Thus, production function is a mathematical relation between output and inputs. In other words, Y=AF (L, K, H, N). So we have to reference to these four functions to determine a country’s …show more content…
Also, with over 1.3 billion people living there China’s unemployment rate is very low at 4.3%. China 's recent productivity performance is remarkable. Their government is executing new trading procedure that will exponentially affect their economic standings and will result in a vast growth in their standards of living. Investors should pay extra attention to China and the new opportunities that will emerge from their plans and I expect that China will soon set the standards of world

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