Question 1

What is the difference between extensive and intensive growth?

Accepted Answer

Extensive growth occurs when production increases simply by adding more factors of production, such as hiring more workers or building more factories. In contrast, intensive growth is driven by efficiency and the "Productivity of Global Factors" (PGF). This means producing more with the same amount of labor and capital, primarily through technical progress, better organization, and improved skills.

Question 2

Why are institutions like property rights considered essential for economic development?

Accepted Answer

Institutions provide the stable legal framework necessary for investment and innovation. For example, property rights and patent systems ensure that creators can protect their inventions and profit from them for a set period. Without this legal security, individuals and companies would have little incentive to spend time and money on research and development, as their ideas could be stolen without consequence.

Question 3

What are the main limitations of using GDP as a measure of wealth?

Accepted Answer

The Gross Domestic Product (GDP) has several major "blind spots" because it only measures market production. It ignores unpaid work like domestic chores or volunteering, and it fails to account for negative externalities such as pollution or the depletion of natural resources. Paradoxically, GDP can even increase following a disaster, like a car accident or an oil spill, because of the spending required for repairs and cleanup, without reflecting an actual improvement in well-being.

Question 4

What is "creative destruction" in the context of innovation?

Accepted Answer

Coined by Joseph Schumpeter, creative destruction describes the brutal process where new innovations inevitably replace and destroy old technologies and industries. While this process is a powerful engine for economic progress—such as digital media replacing VHS tapes—it causes social disruption. It leads to the collapse of entire sectors and job losses, requiring the state to support workers who are displaced by these rapid shifts.

Question 5

Can economic growth be sustained indefinitely on a finite planet?

Accepted Answer

This is a central debate between proponents of "green growth" and "post-growth." Those favoring green growth believe that technical progress can "decouple" GDP from environmental impact through clean energy and circular economies. However, critics point to the "rebound effect," where efficiency gains are offset by increased consumption. They argue that true sustainability requires "sobriety"—a radical reduction in the consumption of energy and raw materials—because infinite growth is physically impossible in a world with limited resources.

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