Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Benin and Botswana had similar saving rates (around 3% of GDP) and similar levels of income per capita (around $600 in 2005 dollars). In the

Benin and Botswana had similar saving rates (around 3% of GDP) and similar levels of income per capita (around $600 in 2005 dollars). In the 1970-2017 period, Benin's saving rate gradually increased to 10%, whereas Botswana's increased to 30%. Assume that multifactor productivity increased the same in both countries over this period. (a) Use the Solow model to predict the effects on the steady-state income per capita for both countries and compare. (b) In 2017, income per capita was around $860 in Benin, and $7,500 in Botswana. Is this consistent with your theoretical predictions from (a)?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Business

Authors: Alan M. Rugman, Simon Collinson

6th edition

273760971, 978-0273760979

More Books

Students also viewed these Economics questions