In this chapter, Professor Larraín talks about the sources of economic growth and Solow's growth accounting framework. Solow’s framework says that there are three main sources of economic growth and productivity, which are accumulation of capital, accumulation of labor, and technological improvement. Economists say that countries grow by transpiration—capital or labor—or inspiration—technology. Larraín gives Solow's Growth Equation and shows how to use, express, and apply the production function. In order to grow, countries must understand how to increase their productivity; this is done using the residual, or what is called "the measure of our ignorance".

This video is licensed under the CC BY-NC-SA license.
This video is licensed under the CC BY-NC-SA license.