Question 3 This question requires you to find the data in the Penn World Tables that measures real GDP per capita using purchasing power parity exchange rates (The last version is Version 10.0, and you can find it by googling "Penn World Tables; they are hosted inside the website of the University of Groningen). The variable rgdpo is total real output in millions of PPP 2011 US dollars. The variable pop is population in millions. You will have to isolate these variables in a spreadsheet (you can use Excel or any similar program) and construct real GDP per person for each country in each year. In manipulating the data in a very large spreadsheet, you will be able to answer the following questions. PART I. Convergence between Japan and the United States since 1960 Using the data in the Penn World Tables, find real GDP per capita in the United States and Japan in 1960, 1990, and the most recent year available. (a) Compute the average annual growth rates of GDP per person for the United States and Japan for two time periods: 1960 to 1990, and 1990 to the most recent year available. Did the level of real output per person in Japan tend to converge to the level of real output per person in the United States in both of these periods? Explain. (b) Suppose that in every year since 1990, Japan and the United States had each continued to have their average annual growth rates for the period 1960 to 1990. How would real GDP per person compare in Japan and the United States today? (c) What actually happened to growth in real GDP per capita in Japan and the United States from 1990 to the most recent year available? PART II. Convergence in two sets of countries Consider three rich countries: France, Belgium, and Italy, and four poor countries, Ethiopia, Kenya, Nigeria, and Uganda. Define for each country the ratio of its real GDP per person to that of the United States in 1970 and the latest year available. This ratio will be equal to 1 for the United States for both years. (a) Calculate these ratios for France, Belgium, and Italy in 1970 and the latest year available (or, even better, do this for the entire period if you find a fast and easy way to compute it no worries otherwise). Does your data support the notion of convergence among France, Belgium, and Italy with the United States? (b) Calculate these same ratios for Ethiopia, Kenya, Nigeria, and Uganda in 1970 and 2014. Does this data support the notion of convergence among Ethiopia, Kenya, Nigeria, and Uganda with the United States? PART III. Growth successes and failures Using the Penn World Tables, find the data on real GDP per person (chained series) for 1970 for all available countries. Do the same for a recent year of data where the data are available for most countries (it takes more time to produce this measure in some countries than in others). (a) Rank the countries according to GDP per person in 1970. List the coun- tries with the 10 highest levels of GDP per person in 1970. Are there any surprises? (b) Carry out the analysis in part (a) for the most recent year for which you collected data. Has the composition of the 10 richest countries changed since 1970? (c) Use all the countries for which there are data in both 1970 and your latest year. Which 10 countries have the highest rate of growth of real GDP per capita after 1970? (d) Use all the countries for which there are data in both 1970 and your latest year. Which 10 countries have the lowest rate of growth of real GDP per capita after 1970? (e) Do a brief Internet search on either the country from part c with the greatest increase in GDP per capita or the country from part d with the smallest increase. Can you guess any reasons for the economic success, or lack of it, for this country
