A tale of two economies Section A: Economic Growth and Inequality

a) Using the data here: https://ourworldindata.org/grapher/historys-hockey-stick-gross-domestic- product-per-capita-using-the-ratio-scale-1990, produce a graph plotting the real GDP per capita (using

the ratio scale) of two countries that you are interested in studying, for the period 1950-2016. For each of the two countries, identify a period when its growth rate was increasing, and another period in which its growth rate was roughly constant. b) Discuss the main differences and similarities in economic growth of the two countries. Suggest some explanation for their economic growth, for instance focusing on major political events, policy reform or other changes experienced by the countries. You can see the interactive graph and download an Excel spreadsheet of data that were used to create Figure 1.2 in the textbook, by going to the Globalinc website and clicking 'xlsx' where it says, 'You can also download the data here ...'. Choose the two countries that you are interested in (the same for which you produced the graph in point a) ). c) For each country, calculate the rich/poor ratio in 1980, 1990 and 2014. in Excel, follow the step-by-step instructions in the walk-through in Figure 1.3.) d) For each country, draw the Lorenz curve for the year 1980, 1990 and 2014, respectively. You should obtain six Lorenz Curves in total, three for each country. e) Using a Gini coefficient calculator, calculate the Gini coefficient for each of your Lorenz curves. You should have six coefficients in total. Label each Lorenz curve with its corresponding Gini coefficient, and check that the coefficients are consistent with what you see in your charts. (Hint: In the Gini calculator, paste the list of incomes by decile into the box provided, and then add commas between the income values.) f) For each measure (rich/poor ratio and Gini coefficient), give an intuitive explanation of how it is measured and what we can learn about income inequality from it. You may find the page on 'Inequality measures' helpful. g) For each measure of income inequality (i.e. rich/poor ration and Gini coefficient) computed in point c) and e) respectively, compare the distribution of income across time for each country, and across countries for each year (1980, 1990 and 2014). h) Suggest some explanations for any similarities and differences you observe. (You may want to research your chosen countries to see if there were any changes in government policy, political events, or other factors that may affect the income distribution.)