Question growth model
4.2) (2 points) Consider the given piece of article and answer all parts of this question. Catch as catch can Selected regions, difference in growth rate* of GDP per person compared with the United States, percentage points Emerging Asia 6 4 2 Emerging Europe 0 -2 Sub-Saharan Africa Latin America & the Caribbean -4 Middle East, North Africa, Afghanistan and Pakistan -6 1980-1989 90-99 2000-09 10-19 Source: IMF *Ten-year averages At purchasing-power parity The Economist "For a rich economy, a growth rate beginning with a five would be cause for ecstasy. For India, it is a huge disappointment. Its most recent quarterly growth figure translates into an annualised rate of only 5.8%, the fourth consecutive quarterly slowdown. That is slower than China (a 6.2% annualised rate in the second quarter of 2019, down from 6.4% in the first) and substantially slower than India believes itself capable of. Recent data suggest the swoon has since deepened (and an analysis published in June by a former adviser to the Indian government also suggests that the China-like growth rates posted in the recent past may reflect dodgy statistics). India is hardly doomed; if it might reasonably have expected to do better, experience elsewhere shows it could very easily have done worse. But the slowdown is yet another sign that the emerging-market narratives to which the world has grown accustomed are in need of serious revision. During most of the 20th century advanced economies outgrew poorer ones. But around the turn of the millennium a dramatic shift occurred. In terms of real GDP per person, adjusted for purchasing- power parity, just 24% of the countries now classified as emerging markets by the IMF grew faster than America did across the 1980s as a whole. In the decade starting in 2000, by contrast, 76% did so. Then the brics-Brazil, Russia, India and China-were in their pomp. Poverty rates tumbled across developing countries and the world economic order was rewritten. Over the past ten years about 60% of emerging economies have grown faster than America. But, the geographic scope of catch-up growth is narrowing. Real output per person as a share of that in America has fallen since 2011 in the Middle East and north Africa, since 2013 in Latin America, and since 2014 in sub-Saharan Africa. Estimates suggest decline this year in the emerging economies of Europe, leaving Asia as a last outpost of convergence-admittedly a big and important one. A wobble in India thus represents more than a blow to Indian pride. ... There are some possibilities that some countries in emerging markets still have room to grow. Poor countries catch up with rich ones when productivity rates and the amount of capital per worker rise towards levels in the rich world. Increasing productivity is partly about moving workers from sectors where it is low to those where it is high (from subsistence farming to textile manufacturing, say), and partly about achieving steady growth in productivity within sectors." Discuss the concepts of absolute convergence and conditional convergence. Is the article discussing about the two concepts? Explain
