Practice question · Put in order
Order these steps of the virtuous growth circle, starting from secure institutions.
- Higher income funds the next round of all three
- Education deepens human capital
- Innovation raises productivity
- Property rights make investment safe
- Households save and firms build capital
Hints
- Nothing is accumulated until accumulating is safe.
- The circle closes when income feeds back into its own causes.
Show the answer
- Property rights make investment safe
- Households save and firms build capital
- Education deepens human capital
- Innovation raises productivity
- Higher income funds the next round of all three
Why
Institutions unlock accumulation, accumulation feeds innovation, and income closes the loop, growth as a self-reinforcing circle rather than a one-off gift.
Practise Economic Growth
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