Question

Holding constant all other factors that might affect a country's rate of economic growth, would we expect growth rates to be higher for countries above the line or for those below it?

Answer 1

In general, we would expect growth rates to be higher for countries below the line. Low-income countries tend to have faster GDP growth compared to middle-income and high-income countries. This pattern suggests that countries below the line have the potential for faster economic growth compared to countries above the line.

Step-by-step explanation:

In general, we would expect growth rates to be higher for countries below the line. The table shows that low-income countries tend to have faster GDP growth compared to middle-income and high-income countries. For example, China and India, both members of the fast-growth club, have high GDP growth rates. On the other hand, high-income countries like the United States and France tend to have slower GDP growth rates.

This pattern suggests that countries below the line, which are usually low-income countries, have the potential for faster economic growth compared to countries above the line. This could be due to various factors such as higher investment in human and physical capital, technological gains, market forces, and government policies.

Higher economic growth rates can lead to profound transformations for a country over time. It can improve the standard of living and increase GDP per capita significantly, as shown in the example given in the reference material.