4. The catch-up effect

Consider the economies of Sporon and Gobbledigook, both of which produce gobs of goo using only tools and workers. Suppose that, during the course of 30 years, the level of physical capital per worker rises by 4 tools per worker in each economy, but the size of each labour force remains the same.

Compiete the following tables by entering productivity (in terms of output per worker) for each economy in 2013 and 2043. Sporon Physical Capital Labour Force Output Productivity Year (Tools per worker) (Workers) (Gobs of goo) (Gobs per worker) 2013 7 30 3,000 E 2043 11 30 3,600 E Gobbledigook Physical Capital Labour Force Output Productivity Year ( Tools per worker) (Workers) (Gobs of goo) (Gobs per worker) 201 3 4 30 2,400 2043 a 30 3,600 E Initially, the number of tools per worker was higher in Sporon than in Gobbledigook, From 2013 to 2043, capital per worker rises by 4 units in each country. The 4-unit change in capital per worker causes productivity in Sporon to rise by a V amount than productivity in Gobbiedigook. This illustrates the concept of V , which makes it V for countries with low output to catch up to those with higher output. Suppose Yamahonda, a Japanese-owned motorcycle manufacturer, builds a production piant in Alberta. This is an example of foreign V investment in Canada. Which of the following policies are consistent with the goal of increasing productivity and growth in developing countries? Check ah' that apply. El Increase taxes on income from savings. CI Protect property rights and enforce contracts, El Give families cash payments on the condition that their children show up for school and medical exams. El Provide tax breaks and patents for rms that pursue research and development in health and sciences. In less developed countries, what does the brain drain refer to? 0 Rapid population growth that increases the burden on the educational system 0 Lower productivity due to a malnourished workforce O The emigration of highly skilled workers to rich countries 0 Rapid population growth that lowers the stock of capital per worker