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GDP Growth Rate: Economic Performance of Nations

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Differences in economic performance of nations, often described as economic growth, are often captured by the growth of GDP per capita. Algebraically,
Let π stand for the growth of GDP per capita, β stand for growth in real GDP, and µ stand for growth in population of a typical nation. We learned in our last class meeting that the growth performance of a nation can be expressed as:
π= β - µ...........................................................(1)

a) Using this equation, and the following list of countries and their respective growth in the three variables defined above, calculate the growth rate (of GDP per capita) for each country and explain if the growth rate has something to do with the life expectancy in each country. [25 pts.]
Life expectancy
β µ π Male Female
Belgium 1.9 0.3 ____ 75 81
Ghana 4.8 2.7 ____ 58 62
Sweden 3.9 0.4 ____ 77 82
United Kingdom 1.7 0.3 ____ 75 80 India 1.9 1.8 ____ 62 64

b) Look for the real GDP of these countries for any year of your choice, from familiar economic data sources like the UNDP's Human Development Report, the World Bank's World Development Report or the International Monetary Fund's Finance & Development. Rank these countries according to the size of their respective real GDPs.

According to the growth rates of GDP/capita (π) that you calculated in the table above, use the Rule of 72 to calculate how many years it will take each country's real GDP to double.

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The relations of GDP growth rate with life expectancy and size of GDP is discussed in a structured manner in this response. The related references are also provided.

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a) Using the equation and the list of countries and their respective three variables divided, the growth rate of GDP per capital per country, we find that the growth rate is positively related to the life expectancy of each country.
¬π Male Female
Belgium 1.6 75 81
Ghana 2.1 58 62
Sweden 3.5 77 82
UK 1.4 75 80
India 0.1 62 64

We find the ...

Solution provided by:
Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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