[Related to the Making the Connection] Economist Charles Kenny of the World Bank

Question

[Related to the Making the Connection] Economist Charles Kenny of the World Bank has argued that:

The process

technologieslong dash

institutions

like laws and inventory management

systemslong dash

that

appear central to raising incomes per capita flow less like water and more like bricks. But ideas and

inventionslong dash

the

importance of ABCs and vaccines for

DPTlong dash

really

might flow more easily across borders and over distances.

Source: Charles Kenny, Getting

Better,

New York: Basic Books, 2011, p. 117.

If Kenny is correct, these facts indicate that these low-income countries

A.

will remain in their phase of stagnating growth and will never be able to catch-up with the living standards with high-income countries.

B.

will have a healthier and more productive labor force that will increase rapidly their rates of growth of real GDP per capita in the decades ahead.

C.

will need a much lower rate of economic growth to significantly close the gap in living standards with high-income countries.

D.

will have a healthier and more productive labor force as there is significant improvment in health, education, and civil and political liberties.

As these countries become able to increase their standards of living, there

A.

will be a significant drop in the rate of economic growth because these countries have very little growth in their incomes.

B.

may be a decline in income and that will further lower the prospects of growth for these nations.

C.

will be economic growth but in order to have sustainable growth, these countries need their incomes to increase.

D.

may be an increase in income but higher rates of economic growth is needed for these countries to catch-up with high-income countries.

Explanation / Answer

1)B will have a healthier and more productive labor force that will increase rapidly their rates of growth of real GDP per capita in the decades ahead.

Because rising income is key to longterm well being in developing countries. Even without political libterties china emerged as middle income country

2) D.

For these countries to catch up they need much higher growth rates than developed world.

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