The following table shows real GDP per capita for the United States, South Korea

Question

The following table shows real GDP per capita for the United States, South Korea, and Chad between 1970 and 2000. All figures are in 1998 U.S. dollars. The (decade-long) economic growth rate for the United States is shown in the second column. For example, from 1970 to 1980, the United States GDP grew from $18,395 to $22,666, an increase of 18.395 23% 18.395 Use this method to fill in the growth rates for South Korea and Chad. United States South Korea Chad Growth Rate Real GDP per Capita $228 $150 $188 $167 Growth Rate Year Real GDP per Capia Grwth Rate Real GDP per Capita $1,886 $3,262 $6,615 $10,807 1970 1980 1990 2000 $18,395 $22,666 S28,435 534,770 23% 25% 22% Source: Organisation for Economic Cooperation and Development (OECD) Compare the data for the United States and South Korea between 1970 and 1980. During this period, real GDP per capita, while had a higher level of experienced a higher growth rate in real GDP per capita Convergence theory predicts that poor countries will grow more quickly than rich countries. Which one of the follovwing is a reason for this? O Rich countries devote a large fraction of their GDP to helping poor countries. O Copying existing technologies is less expensive than developing them independently. OPoor countries tend to have higher birth rates than rich countries. . Which of the following statements can Those who don't believe in the theory of convergence point to countries such as explain why the theory of convergence may not always hold? Check all that apply Many poor countries have much less human capital than rich countries. theory applies only to small Many poor countries have much higher birth rates than rich countries.

Explanation / Answer

1970-1980:

During this period, United States had a higher level of real GDP per capita, while South Korea experienced a higher growth rate in real GDP per capita.

Correct statement-

Copying existing technologies is less expensive than developing them independently.

Those who don't believe in the theory of convergence point to countries such as Chad.

Correct statements:

- Many poor countries have much less human capital than rich countries. (unskilled labour, poor education levels)

- Many poor countries have much higher birth rates than rich countries.

South Korea Chad Year Real GDP per Capita Growth rate (%) Real GDP per Capita Growth rate (%) 1970 1886 228 1980 3262 72.96 150 -34.21 1990 6615 102.79 188 25.33 2000 10807 63.37 167 -11.17

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