Question

Growth Rate South Korea Real GDP per capita Growth Rate Year 1970 1980 Growth Rate Canada Real GDP per capita $12,717 $16,731 Uganda Real GDP per capita $190 $1,886 $3,262 $182 $176 1990 $19,540 $23,156 $6,615 $10,80% 2000 Source: Organisation for Economic Cooperation and Development (OECD) The (decade-long) economic growth rate for Canada is shown in the second column. For example, from 1970 to 1980, Canada GDP grew from $12,717 to $16,731, an increase of Sie 512717 1711-512.717 32 Use this method to fill in the growth rates for South Korea and Uganda in the previous table. Enter the growth rates to the nearest whole protag point. had a higher level of real GDP per Compare the data for Canada and South Korea between 1970 and 1980. During this period, capita, while experienced a higher growth rate in real GDP per capita. South Korea Convergence theory predicts that poor countries will grow more quickly than rich countries. Canada le following is a reason for this? Rich countries devote a large fraction of their GDP to helping poor countries. Copying existing technologies is less expensive than developing them independently. Der countries tend to have her birth rates than rich countries

Answer 1

Real GDP per capita in 1970 in South Korea = $1,886

Real GDP per capita in 1980 in South Korea = $3,262

Calculate the growth rate of real GDP per capita in South Korea between 1970 and 1980 -

Growth rate = [($3,262 - $1,886)/$1,886] * 100 = 73%

The growth rate of real GDP per capita in South Korea between 1970 and 1980 was 73%.

Similarly, growth rate for other decades for South Korea and Uganda can be calculated.

Following is the complete table -

Canada Real GDP per capita $12.717 Growth Rate Year 1970 1980 Growth Rate South Korea Real GDP per capita Growth Rate $1,886 $3,262 73 $6,615 103 $10,807 63 Uganda Real GDP per capita $190 $182 $176 $16,731 1990 $19,540 2000 $23,156 $247

Between 1970 and 1980, real GDP per capita of Canada increased by $4,014 while real GDP per capita of South Korea increased by $1,376. However, growth rate of real GDP per capita in Canada between 1970 and 1980 was 32% while in South Korea, it was 73%.

So,

Compare the data for Canada and South Korea between 1970 and 1980. During this period, Canada had a higher level of real GDP per capita, while South Korea experienced a higher growth rate in real GDP per capita.

The main reason that has been cited behind the convergence theory is as follows -

Copying existing technologies is less expensive than developing them independently.

The table shows that Uganda has not grown rapidly relative to South Korea.

So,

Those who do not believe in the theory of convergence point to countries such as Uganda.

Following statements explains that theory of convergence may not always hold true -

1. Many poor countries do not have the necessary infrastructure for adopting existing technologies.

2. Many poor countries have much less human capital than rich countries.

The growth experience of South Korea illustrates that relatively poor countries can grow more quickly than rich countries.