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90-449: A learning curve is a relationship of the duration or the degree of effort invested in learning and experience with the resulting progress, considered as an exploratory discovery process. Learning Curve may also refer to: Learning curve The common expression "a steep learning curve" is a misnomer suggesting that an activity is difficult to learn and that expending much effort does not increase proficiency by much, although

180-421: A learning curve with a steep start actually represents rapid progress. In fact, the gradient of the curve has nothing to do with the overall difficulty of an activity, but expresses the expected rate of change of learning speed over time. An activity that it is easy to learn the basics of, but difficult to gain proficiency in, may be described as having "a steep learning curve". The learning curve may refer to

270-734: A change in the Constitution—and the type of institutions created by that change—does not necessarily create a change in political power if the economic powers of that society are not aligned with the new set of rule of law institutions. In England, a dramatic increase in the state's fiscal capacity followed the creation of constraints on the crown, but elsewhere in Europe increases in state capacity happened before major rule of law reforms. There are many different ways through which states achieved state (fiscal) capacity and this different capacity accelerated or hindered their economic development. Thanks to

360-660: A condition known as the Malthusian trap . The rapid economic growth that occurred during the Industrial Revolution was remarkable because it was in excess of population growth, providing an escape from the Malthusian trap. Countries that industrialized eventually saw their population growth slow down, a phenomenon known as the demographic transition . Increases in productivity are the major factor responsible for per capita economic growth—this has been especially evident since

450-459: A developing economy. Mortality decline triggers greater investments in individual human capital and an increase in economic growth. Matteo Cervellati and Uwe Sunde and Rodrigo.R Soares consider frameworks in which mortality decline has an influence on parents to have fewer children and to provide quality education for those children, as a result instituting an economic-demographic transition. The relationship between health and economic growth

540-460: A financial year. The economic growth rate is typically calculated as real Gross domestic product (GDP) growth rate , real GDP per capita growth rate or GNI per capita growth . The "rate" of economic growth refers to the geometric annual rate of growth in GDP or GDP per capita between the first and the last year over a period of time. This growth rate represents the trend in the average level of GDP over

630-409: A game is perceived to be winnable. This is therefore referred to as the illusion of winnability . To generate an illusion of winnability games can include, internal value (a sense of moving towards a goal and being rewarded for it) driven by conflict which can be generated by an antagonistic environment and story driven suspense in the form of world building . The latter is not pivotal to progressing in

720-426: A game. Game designers may also make changes in gameplay by, for instance, limiting resources. One perspective is that if players are not tricked to believe that the video game world is real - if the world does not feel vibrant - then there is no point in creating the game. Economic growth Heterodox Economic growth can be defined as the increase or improvement in the inflation-adjusted economy in

810-581: A log-linear relationship to average years of schooling, which is consistent with the log-linear relationship between workers' personal incomes and years of schooling in the Mincer model . Eric Hanushek and Dennis Kimko introduced measures of students' mathematics and science skills from international assessments into growth analysis. They found that this measure of human capital was very significantly related to economic growth. Eric Hanushek and Ludger Wößmann have extended this analysis. Theodore Breton shows that

900-595: A metaphorical interpretation of the learning curve as a hill to climb. (A steeper hill is initially hard, while a gentle slope is less strainful, though sometimes rather tedious. Accordingly, the shape of the curve (hill) may not indicate the total amount of work required. Instead, it can be understood as a matter of preference related to ambition, personality and learning style.) The term learning curve with meanings of easy and difficult can be described with adjectives like short and long rather than shallow and steep . If two products have similar functionality then

990-558: A point increases in the amount of capital per worker are an important cause of economic output growth. Capital is subject to diminishing returns because of the amount that can be effectively invested and because of the growing burden of depreciation. In the development of economic theory, the distribution of income was considered to be between labor and the owners of land and capital. In recent decades there have been several Asian countries with high rates of economic growth driven by capital investment. The work week declined considerably over

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1080-555: A series of inquiries undertaken by the parliamentary Business, Energy and Industrial Strategy Committee , which argues that the UK Government "has a big job to do in helping businesses survive, stimulating economic growth and encouraging the creation of well-paid meaningful jobs". Policymakers and scholars frequently emphasize the importance of entrepreneurship for economic growth. However, surprisingly few research empirically examine and quantify entrepreneurship's impact on growth. This

1170-487: A smooth curve results, which can often be described with a mathematical function . Several main functions have been used: The specific case of a plot of Unit Cost versus Total Production with a power law was named the experience curve : the mathematical function is sometimes called Henderson's Law. This form of learning curve is used extensively in industry for cost projections. Plots relating performance to experience are widely used in machine learning . Performance

1260-572: A specific task or a body of knowledge . Hermann Ebbinghaus first described the learning curve in 1885 in the field of the psychology of learning, although the name did not come into use until 1903. In 1936 Theodore Paul Wright described the effect of learning on production costs in the aircraft industry . This form, in which unit cost is plotted against total production , is sometimes called an experience curve , or Wright's law . Hermann Ebbinghaus' memory tests, published in 1885, involved memorizing series of nonsense syllables , and recording

1350-419: A two-phase process of first bigger steps corresponding to finding things easier, followed by smaller steps of finding things more difficult. It reflects bursts of learning following breakthroughs that make learning easier followed by meeting constraints that make learning ever harder, perhaps toward a point of cessation. The expression "steep learning curve" is used with opposite meanings. Most sources, including

1440-465: A whole system learning process with varying rates of progression. Generally speaking all learning displays incremental change over time, but describes an "S" curve which has different appearances depending on the time scale of observation. It has now also become associated with the evolutionary theory of punctuated equilibrium and other kinds of revolutionary change in complex systems generally, relating to innovation , organizational behavior and

1530-416: Is also crucial. Protection from the shocks produced by illness and death, are usually taken care of within a country’s social insurance system. In areas such as Sub-Saharan Africa, where the prevalence of HIV and AIDS , has a comparative negative impact on economical development. It will be interesting to see how research in the areas of health in near future uncover how the world will be performing living with

1620-534: Is causal. They show that the level of students' cognitive skills can explain the slow growth in Latin America and the rapid growth in East Asia. Joerg Baten and Jan Luiten van Zanden employ book production per capita as a proxy for sophisticated literacy capabilities and find that "Countries with high levels of human capital formation in the 18th century initiated or participated in the industrialization process of

1710-457: Is difficult to measure since it is created at home, at school, and on the job. Economists have attempted to measure human capital using numerous proxies, including the population's level of literacy, its level of numeracy, its level of book production/capita, its average level of formal schooling, its average test score on international tests, and its cumulative depreciated investment in formal schooling. The most commonly-used measure of human capital

1800-465: Is due to endogeneity—forces that drive economic growth also drive entrepreneurship. In other words, the empirical analysis of the impact of entrepreneurship on growth is difficult because of the joint determination of entrepreneurship and economic growth. A few papers use quasi-experimental designs, and have found that entrepreneurship and the density of small businesses indeed have a causal impact on regional growth. Another major cause of economic growth

1890-448: Is further nuanced by distinguishing the influence of specific diseases on GDP per capita from that of aggregate measures of health , such as life expectancy Thus, investing in health is warranted both from the growth and equity perspectives, given the important role played by health in the economy. Protecting health assets from the impact of systemic transitional costs on economic reforms, pandemics, economic crises and natural disasters

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1980-439: Is influenced by the size of the economy. The relation between GDP growth and GDP across the countries at a particular point of time is convex. Growth increases as GDP reaches its maximum and then begins to decline. There exists some extremum value. This is not exactly middle-income trap. It is observed for both developed and developing economies. Actually, countries having this property belong to conventional growth domain . However,

2070-444: Is linear, which eventually reduces living standards to the point of triggering a population die off. The Malthusian theory also proposes that over most of human history technological progress caused larger population growth but had no impact on income per capita in the long run. According to the theory, while technologically advanced economies over this epoch were characterized by higher population density, their level of income per capita

2160-425: Is not the absence of illness, but the opportunity for people to biologically develop to their full potential their entire lives It is established that human capital is an important asset for economic growth, however, it can only be so if that population is healthy and well-nourished. One of the most important aspects of health is the mortality rate and how the rise or decline can affect the labour supply predominant in

2250-430: Is not the same in all countries. This measure also presumes that human capital is only developed in formal schooling, contrary to the extensive evidence that families, neighborhoods, peers, and health also contribute to the development of human capital. Despite these potential limitations, Theodore Breton has shown that this measure can represent human capital in log-linear growth models because across countries GDP/adult has

2340-434: Is termed the business cycle . Generally, according to economists, the ups and downs in the business cycle can be attributed to fluctuations in aggregate demand . In contrast, economic growth is concerned with the long-run trend in production due to structural causes such as technological growth and factor accumulation. Increases in labor productivity (the ratio of the value of output to labor input) have historically been

2430-412: Is the error rate or accuracy of the learning system, while experience may be the number of training examples used for learning or the number of iterations used in optimizing the system model parameters. The machine learning curve is useful for many purposes including comparing different algorithms, choosing model parameters during design, adjusting optimization to improve convergence, and determining

2520-701: Is the exponent n {\displaystyle n} measuring the strength of learning. It is usually expressed as n = log ⁡ ( ϕ ) / log ⁡ ( 2 ) {\displaystyle n=\log(\phi )/\log(2)} , where ϕ {\displaystyle \phi } is the "learning rate". In words, it means that the unit cost decreases by 1 − ϕ {\displaystyle 1-\phi } , for every doubling of total units made. Wright found that ϕ ≈ 80 % {\displaystyle \phi \approx 80\%} in aircraft manufacturing, meaning that

2610-416: Is the introduction of new products and services and the improvement of existing products. New products create demand, which is necessary to offset the decline in employment that occurs through labor-saving technology (and to a lesser extent employment declines due to savings in energy and materials). In the U.S. by 2013 about 60% of consumer spending was for goods and services that did not exist in 1869. Also,

2700-438: Is the level (average years) of school attainment in a country, building upon the data development of Robert Barro and Jong-Wha Lee. This measure is widely used because Barro and Lee provide data for numerous countries in five-year intervals for a long period of time. One problem with the schooling attainment measure is that the amount of human capital acquired in a year of schooling is not the same at all levels of schooling and

2790-608: The Oxford Dictionary of English , the American Heritage Dictionary of the English Language , and Merriam-Webster's Collegiate Dictionary , define a learning curve as the rate at which skill is acquired, so a steep increase would mean a quick increment of skill. However, the term is often used in common English with the meaning of a difficult initial learning process. The common English usage aligns with

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2880-613: The Great Depression , economic growth resumed, aided in part by increased demand for existing goods and services, such as automobiles, telephones, radios, electricity and household appliances. New goods and services included television, air conditioning and commercial aviation (after 1950), creating enough new demand to stabilize the work week. The building of highway infrastructures also contributed to post-World War II growth, as did capital investments in manufacturing and chemical industries. The post-World War II economy also benefited from

2970-530: The Green Revolution . Interchangeable parts made with machine tools powered by electric motors evolved into mass production , which is universally used today. Great sources of productivity improvement in the late 19th century were railroads, steam ships, horse-pulled reapers and combine harvesters , and steam -powered factories. The invention of processes for making cheap steel were important for many forms of mechanization and transportation. By

3060-550: The Indian subcontinent and Asia Pacific . In 1957 South Korea had a lower per capita GDP than Ghana , and by 2008 it was 17 times as high as Ghana's. The Japanese economic growth has slackened considerably since the late 1980s. Productivity in the United States grew at an increasing rate throughout the 19th century and was most rapid in the early to middle decades of the 20th century. U.S. productivity growth spiked towards

3150-488: The SARS-CoV-2 , especially looking at the economic impacts it already has in a space of two years. Ultimately, when people live longer on average, human capital expenditures are more likely to pay off, and all of these mechanisms center around the complementarity of longevity, health , and education , for which there is ample empirical evidence. "As institutions influence behavior and incentives in real life, they forge

3240-614: The United Nations also consider that cultural property protection, high-quality education, cultural diversity and social cohesion in armed conflicts are particularly necessary for qualitative growth. According to Daron Acemoglu , Simon Johnson and James Robinson , the positive correlation between high income and cold climate is a by-product of history. Europeans adopted very different colonization policies in different colonies, with different associated institutions. In places where these colonizers faced high mortality rates (e.g., due to

3330-426: The arduous interpretation as 1978. The idea of learning curves is often translated into video game gameplay as a "difficulty curve", which described how hard the game may get as the player progresses through the game and requiring the player to either become more proficient with the game, gain better understanding of the game's mechanics, and/or spend time " grinding " to improve his or her characters. Establishing

3420-490: The management of group learning, among other fields. These processes of rapidly emerging new form appear to take place by complex learning within the systems themselves, which when observable, display curves of changing rates that accelerate and decelerate. Learning curves , also called experience curves , relate to the much broader subject of natural limits for resources and technologies in general. Such limits generally present themselves as increasing complications that slow

3510-426: The 1940s was the big push model , which suggested that countries needed to jump from one stage of development to another through a virtuous cycle , in which large investments in infrastructure and education coupled with private investments would move the economy to a more productive stage, breaking free from economic paradigms appropriate to a lower productivity stage. The idea was revived and formulated rigorously, in

3600-601: The 1950s. In 1968 Bruce Henderson of the Boston Consulting Group (BCG) generalized the Unit Cost model pioneered by Wright, and specifically used a Power Law , which is sometimes called Henderson's Law . He named this particular version the experience curve . Research by BCG in the 1970s observed experience curve effects for various industries that ranged from 10 to 25 percent. The main statistical models for learning curves are as follows: The key variable

3690-407: The 19th century, whereas countries with low levels of human capital formation were unable to do so, among them many of today's Less Developed Countries such as India, Indonesia, and China." Here, health is approached as a functioning from Amartya Sen and Martha Nussbaum 's capability approach that an individual has to realise the achievements like economic success. Thus health in a broader sense

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3780-517: The 19th century. By the 1920s the average work week in the U.S. was 49 hours, but the work week was reduced to 40 hours (after which overtime premium was applied) as part of the National Industrial Recovery Act of 1933. Demographic factors may influence growth by changing the employment to population ratio and the labor force participation rate. Industrialization creates a demographic transition in which birth rates decline and

3870-600: The English in North America started by trying to repeat the success of the Spanish Conquistadors in extracting wealth (especially gold and silver) from the countries they had conquered. This system repeatedly failed for the English. Their successes rested on giving land and a voice in the government to every male settler to incentivize productive labor. In Virginia it took twelve years and many deaths from starvation before

3960-516: The abolishment of anti-usury laws. Much of the literature on economic growth refers to the success story of the British state after the Glorious Revolution of 1688, in which high fiscal capacity combined with constraints on the power of the king generated some respect for the rule of law. However, others have questioned that this institutional formula is not so easily replicable elsewhere as

4050-431: The accumulation of human and physical capital and the increase in productivity and creation of new goods arising from technological innovation. Further division of labour (specialization) is also fundamental to rising productivity. Before industrialization technological progress resulted in an increase in the population, which was kept in check by food supply and other resources, which acted to limit per capita income,

4140-446: The amount of data used for training. Initially introduced in educational and behavioral psychology , the term has acquired a broader interpretation over time, and expressions such as "experience curve", "improvement curve", "cost improvement curve", "progress curve", "progress function", "startup curve", and "efficiency curve" are often used interchangeably. In economics the subject is rates of " development ", as development refers to

4230-456: The amount of inputs available for use (increased population, for example, or new territory) counts as extensive growth . Innovation also generates economic growth. In the U.S. about 60% of consumer spending in 2013 went on goods and services that did not exist in 1869. In national income accounting, per capita output can be calculated using the following factors: output per unit of labor input (labor productivity), hours worked (intensity),

4320-443: The application of learning curve on managerial economics would provide plenty of benefits on strategic level. People could predict the appropriate timing of the introductions for new products and offering competitive pricing decisions, deciding investment levels by stimulate innovations on products and the selection of organizational design structures. Balachander and Srinivasan used to study a durable product and its pricing strategy on

4410-451: The average age of the population increases. Women with fewer children and better access to market employment tend to join the labor force in higher percentages. There is a reduced demand for child labor and children spend more years in school. The increase in the percentage of women in the labor force in the U.S. contributed to economic growth, as did the entrance of the baby boomers into the workforce. It has been observed that GDP growth

4500-482: The buyers obey to a learning curve, and this result is useful for decision-making on inventory management . Learning curves have been used to model Moore's law in the semiconductor industry. When wages are proportional to number of products made, workers may resist changing to a different post or having a new member on the team, since it would temporarily decrease productivity. Learning curves has been used to adjust for temporary dips so that workers are paid more for

4590-417: The co-owner of the estate, says, 'I've been on a steep learning curve since arriving at Downton.' By this he means that he has had a difficult time learning the ways of Downton, but people did not start talking that way until the 1970s." Zimmer also comments that the popular use of steep as difficult is a reversal of the technical meaning. He identifies the first use of steep learning curve as 1973, and

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4680-452: The correlation between economic growth and students' average test scores in Hanushek and Wößmann's analyses is actually due to the relationship in countries with less than eight years of schooling. He shows that economic growth is not correlated with average scores in more educated countries. Hanushek and Wößmann further investigate whether the relationship of knowledge capital to economic growth

4770-462: The creation of new services has been more important than invention of new goods. Economic growth in the U.S. and other developed countries went through phases that affected growth through changes in the labor force participation rate and the relative sizes of economic sectors. The transition from an agricultural economy to manufacturing increased the size of the sector with high output per hour (the high-productivity manufacturing sector), while reducing

4860-592: The discovery of vast amounts of oil around the world, particularly in the Middle East . By John W. Kendrick's estimate, three-quarters of increase in U.S. per capita GDP from 1889 to 1957 was due to increased productivity. Economic growth in the United States slowed down after 1973. In contrast, growth in Asia has been strong since then, starting with Japan and spreading to Four Asian Tigers , China , Southeast Asia ,

4950-521: The economical production of metal parts possible, so that parts could be interchangeable. (See: Interchangeable parts .) During the Second Industrial Revolution , a major factor of productivity growth was the substitution of inanimate power for human and animal labor. Also there was a great increase in power as steam-powered electricity generation and internal combustion supplanted limited wind and water power . Since that replacement,

5040-486: The effect of learning on production costs in the aircraft industry and proposed a mathematical model of the learning curve. In 1952, the US Air Force published data on the learning curve in the airframe industry from 1940 to mid-1945. Specifically, they tabulated and plotted the direct man-hour cost of various products as a function of cumulative production. This formed the basis of many studies on learning curves in

5130-504: The end of the century in 1996–2004, due to an acceleration in the rate of technological innovation known as Moore's law . After 2004 U.S. productivity growth returned to the low levels of 1972–96. Capital in economics ordinarily refers to physical capital, which consists of structures (largest component of physical capital) and equipment used in business (machinery, factory equipment, computers and office equipment, construction equipment, business vehicles, medical equipment, etc.). Up to

5220-463: The extremum could be extended by technological and policy innovations and some countries move into innovative growth domain with higher limiting values. Many theoretical and empirical analyses of economic growth attribute a major role to a country's level of human capital , defined as the skills of the population or the work force. Human capital has been included in both neoclassical and endogenous growth models. A country's level of human capital

5310-788: The foundations of modern rule of law states. In many poor and developing countries much land and housing are held outside the formal or legal property ownership registration system. In many urban areas the poor "invade" private or government land to build their houses, so they do not hold title to these properties. Much unregistered property is held in informal form through various property associations and other arrangements. Reasons for extra-legal ownership include excessive bureaucratic red tape in buying property and building. In some countries, it can take over 200 steps and up to 14 years to build on government land. Other causes of extra-legal property are failures to notarize transaction documents or having documents notarized but failing to have them recorded with

5400-475: The governor decided to try democracy. Economic growth, its sustainability and its distribution remain central aspects of government policy. For example, the UK Government recognises that "Government can play an important role in supporting economic growth by helping to level the playing field through the way it buys public goods, works and services ", and "Post- Pandemic Economic Growth" has been featured in

5490-519: The great expansion of total power was driven by continuous improvements in energy conversion efficiency . Other major historical sources of productivity were automation , transportation infrastructures (canals, railroads, and highways), new materials (steel) and power, which includes steam and internal combustion engines and electricity . Other productivity improvements included mechanized agriculture and scientific agriculture including chemical fertilizers and livestock and poultry management, and

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5580-717: The identity or type of legal system of the colonizers to explain institutions, these authors look at the environmental conditions in the colonies to explain institutions. For instance, former colonies have inherited corrupt governments and geopolitical boundaries (set by the colonizers) that are not properly placed regarding the geographical locations of different ethnic groups, creating internal disputes and conflicts that hinder development. In another example, societies that emerged in colonies without solid native populations established better property rights and incentives for long-term investment than those where native populations were large. In Why Nations Fail , Acemoglu and Robinson said that

5670-471: The late 19th century both prices and weekly work hours fell because less labor, materials, and energy were required to produce and transport goods. However, real wages rose, allowing workers to improve their diet, buy consumer goods and afford better housing. Mass production of the 1920s created overproduction , which was arguably one of several causes of the Great Depression of the 1930s. Following

5760-432: The learning curve to study the transition between the old products' eliminating and new products' introduction. Their results indicated that the optimal switching time is determined by the characteristics of product and process, market factors, and the features of learning curve on this production. Konstantaras, Skouri, and Jaber applied the learning curve on demand forecasting and the economic order quantity. They found that

5850-558: The learning experience. Perfecting things becomes ever more difficult despite increasing effort despite continuing positive, if ever diminishing, results. The same kind of slowing progress due to complications in learning also appears in the limits of useful technologies and of profitable markets applying to product life cycle management and software development cycles ). Remaining market segments or remaining potential efficiencies or efficiencies are found in successively less convenient forms. Efficiency and development curves typically follow

5940-472: The learning of how to do things more efficiently, like the well-known limits of perfecting any process or product or to perfecting measurements. These practical experiences match the predictions of the second law of thermodynamics for the limits of waste reduction generally. Approaching limits of perfecting things to eliminate waste meets geometrically increasing effort to make progress, and provides an environmental measure of all factors seen and unseen changing

6030-415: The main factors of economic growth are division of labour and capital accumulation . However, these are conditioned by what he calls "the extent of the market". This is conditioned notably by geographic factors but also institutional ones such as the political-legal environment. Malthusianism is the idea that population growth is potentially exponential while the growth of the food supply or other resources

6120-591: The mid-19th century. Most of the economic growth in the 20th century was due to increased output per unit of labor, materials, energy, and land (less input per widget). The balance of the growth in output has come from using more inputs. Both of these changes increase output. The increased output included more of the same goods produced previously and new goods and services. During the Industrial Revolution , mechanization began to replace hand methods in manufacturing, and new processes streamlined production of chemicals, iron, steel, and other products. Machine tools made

6210-497: The most important source of real per capita economic growth. In a famous estimate, MIT Professor Robert Solow concluded that technological progress has accounted for 80 percent of the long-term rise in U.S. per capita income, with increased investment in capital explaining only the remaining 20 percent. Increases in productivity lower the real cost of goods. Over the 20th century, the real price of many goods fell by over 90%. Economic growth has traditionally been attributed to

6300-404: The number of seeds harvested relative to the number of seeds planted (capital) on a plot of land and the size of the harvest from a plot of land versus the number of workers employed. (See also Diminishing returns ) Criticisms of classical growth theory are that technology, an important factor in economic growth, is held constant and that economies of scale are ignored. One popular theory in

6390-800: The official agency. Not having clear legal title to property limits its potential to be used as collateral to secure loans, depriving many poor countries of one of their most important potential sources of capital. Unregistered businesses and lack of accepted accounting methods are other factors that limit potential capital. Businesses and individuals participating in unreported business activity and owners of unregistered property face costs such as bribes and pay-offs that offset much of any taxes avoided. "Democracy Does Cause Growth", according to Acemoglu et al. Specifically, they state that "democracy increases future GDP by encouraging investment, increasing schooling, inducing economic reforms, improving public goods provision, and reducing social unrest". UNESCO and

6480-492: The one with a "steep" curve is probably better, because it can be learned in a shorter time. On the other hand, if two products have different functionality, then one with a short curve (a short time to learn) and limited functionality may not be as good as one with a long curve (a long time to learn) and greater functionality. For example, the Windows program Notepad is extremely simple to learn, but offers little after this. At

6570-545: The other extreme is the UNIX terminal editor vi or Vim , which is difficult to learn, but offers a wide array of features after the user has learned how to use it. Ben Zimmer discusses the use of the term "on a steep learning curve" in Downton Abbey , a television series set in the early 20th century, concentrating mainly on whether use of the term is an anachronism . "Matthew Crawley, the presumptive heir of Downton Abbey and now

6660-441: The percentage of the working-age population actually working (participation rate) and the proportion of the working-age population to the total population (demographics). "The rate of change of GDP/population is the sum of the rates of change of these four variables plus their cross products." Economists distinguish between long-run economic growth and short-run economic changes in production . Short-run variation in economic growth

6750-656: The period, and ignores any fluctuations in the GDP around this trend. Growth is usually calculated in "real" value, which is inflation-adjusted , to eliminate the distorting effect of inflation on the prices of goods produced. Real GDP per capita is the GDP of the entire country divided by the number of people in the country. Measurement of economic growth uses national income accounting . Economists refer to economic growth caused by more efficient use of inputs (increased productivity of labor , of physical capital , of energy or of materials ) as intensive growth . In contrast, economic growth caused only by increases in

6840-539: The practically achievable level of methodology improvement is reached. The effect of reducing local effort and resource use by learning improved methods often has the opposite latent effect on the next larger scale system, by facilitating its expansion, or economic growth , as discussed in the Jevons paradox in the 1880s and updated in the Khazzoom-Brookes Postulate in the 1980s. A comprehensive understanding of

6930-505: The presence of tropical diseases), they could not settle permanently, and they were thus more likely to establish extractive institutions, which persisted after independence; in places where they could settle permanently (e.g. those with temperate climates), they established institutions with this objective in mind and modeled them after those in their European homelands. In these 'neo-Europes' better institutions in turn produced better development outcomes. Thus, although other economists focus on

7020-510: The principles of the learning curve. Based on the concepts that the growing experience in producing and selling a product would cause the decline of unit production cost, they found the potential best introductory price for this product. As for the problems of production management under the limitation of scarce resources, Liao observed that without including the effects of the learning curve on labor hours and machines hours, people might make incorrect managerial decisions. Demeester and Qi used

7110-407: The rapid rise at the beginning followed by a period of slower learning, and was thus convex to the vertical axis." Psychologist Arthur Bills gave a more detailed description of learning curves in 1934. He also discussed the properties of different types of learning curves, such as negative acceleration, positive acceleration, plateaus, and ogive curves. In 1936, Theodore Paul Wright described

7200-556: The right difficulty curve is part of achieving the game balance within a title. As with learning curves in educational settings, difficulty curves can have multitudes of shapes, and games may frequently provide various levels of difficulty that change the shape of this curve relative to its default to make the game harder or easier. Optimally the difficulty of a video game increases in correspondence with players ability. Games must neither be too challenging nor too undemanding nor too fortuitous. The players will continue playing as long as

7290-411: The same product while they are learning. A learning curve is a plot of proxy measures for implied learning ( proficiency or progression toward a limit) with experience . For the performance of one person in a series of trials the curve can be erratic, with proficiency increasing, decreasing or leveling out in a plateau . When the results of a large number of individual trials are averaged then

7380-480: The service economy expanded in the 2000s. The structural change could also be viewed from another angle. It is possible to divide real economic growth into two components: an indicator of extensive economic growth—the ‘quantitative’ GDP—and an indicator of the improvement of the quality of goods and services—the ‘qualitative’ GDP. Adam Smith pioneered modern economic growth and performance theory in his book The Wealth of Nations , first published in 1776. For Smith,

7470-695: The seventeenth century. Furthermore, Prussia and the Habsburg empire—much more heterogeneous states than England—were able to increase state capacity during the eighteenth century without constraining the powers of the executive. Nevertheless, it is unlikely that a country will generate institutions that respect property rights and the rule of law without having had first intermediate fiscal and political institutions that create incentives for elites to support them. Many of these intermediate level institutions relied on informal private-order arrangements that combined with public-order institutions associated with states, to lay

7560-456: The size of the sector with lower output per hour (the lower productivity agricultural sector). Eventually high productivity growth in manufacturing reduced the sector size, as prices fell and employment shrank relative to other sectors. The service and government sectors, where output per hour and productivity growth is low, saw increases in their shares of the economy and employment during the 1990s. The public sector has since contracted, while

7650-427: The success or failure of nations." In economics and economic history, the transition from earlier economic systems to capitalism was facilitated by the adoption of government policies which fostered commerce and gave individuals more personal and economic freedom. These included new laws favorable to the establishment of business, including contract law , laws providing for the protection of private property , and

7740-399: The success over a number of trials. The translation does not use the term 'learning curve' — but he presents diagrams of learning against trial number. He also notes that the score can decrease, or even oscillate. The first known use of the term 'learning curve' is from 1903: "Bryan and Harter (6) found in their study of the acquisition of the telegraphic language a learning curve which had

7830-613: The underlying homogeneity of its land and people, England was able to achieve a unified legal and fiscal system since the Middle Ages that enabled it to substantially increase the taxes it raised after 1689. On the other hand, the French experience of state building faced much stronger resistance from local feudal powers keeping it legally and fiscally fragmented until the French Revolution despite significant increases in state capacity during

7920-440: The unit cost decreases by 20% for every doubling of total units made. The economic learning of productivity and efficiency generally follows the same kinds of experience curves and have interesting secondary effects. Efficiency and productivity improvement can be considered as whole organization or industry or economy learning processes, as well as for individuals. The general pattern is of first speeding up and then slowing down, as

8010-585: The years 1–1500. In classical ( Ricardian ) economics, the theory of production and the theory of growth are based on the theory of sustainability and law of variable proportions, whereby increasing either of the factors of production (labor or capital), while holding the other constant and assuming no technological change, will increase output, but at a diminishing rate that eventually will approach zero. These concepts have their origins in Thomas Malthus ’s theorizing about agriculture. Malthus's examples included

8100-468: Was not different from those among technologically regressed society. The conceptual foundations of the Malthusian theory were formed by Thomas Malthus, and a modern representation of these approach is provided by Ashraf and Galor. In line with the predictions of the Malthusian theory, a cross-country analysis finds a significant positive effect of the technological level on population density and an insignificant effect on income per capita significantly over

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