1. Economic growth around the world
The following table reports real income per person for several different economies in the years 1960 and 2010. It also gives each economy’s average annual growth rate during this period. For example, real income per person in Madagascar was $1,223 in 1960, and it actually declined to $789 by 2010. Madagascar’s average annual growth rate during this period was -0.87%, and it was the poorest economy in the table in the year 2010.
The real income-per-person figures are denominated in U.S. dollars with a base year of 2005. The following exercises will help you to understand the different growth experiences of these economies.
EconomyReal Income per Person in 1960Real Income per Person in 2010Annual Growth Rate(Dollars)(Dollars)(Percent)United States15,13641,8582.06New Zealand12,86824,3971.29Indonesia7443,9933.42Taiwan2,06132,8655.69Sri Lanka7904,0473.32Madagascar1,223789-0.87
Indicate which economy satisfies each of the following statements.
This economy had the highest level of real income per person in the year 2010.
This economy experienced the fastest rate of growth in real income per person from 1960 to 2010.
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In 2010, the United States had the highest level of real income per person: $41,858.
From 1960 to 2010, real income per person in Taiwan grew at an average annual rate of 5.69%, the highest growth rate in the table.
Consider the following list of four countries. Which economy began with a level of real income per person in 1960 that was well below that of New Zealand and grew fast enough to catch up with and surpass New Zealand’s real income per person by 2010?