Final answer:
In the long run, doubling total factor productivity is more likely to make a country richer compared to doubling the saving rate. While a higher saving rate can contribute to economic growth through capital deepening, it faces diminishing returns in high capital environments. Productivity growth, driven by technological innovation, can have a sustained and significant impact on long-term economic prosperity.
Step-by-step explanation:
To determine what will make a country richer in the long run, we must understand the impact of savings rates and total factor productivity on long-term economic growth. Looking at economic principles, we see that a higher saving rate can lead to an increase in the amount of capital per worker, which is known as capital deepening. This can contribute to a rise in GDP per capita, especially when there are complementary increases in human capital (education or skills) and physical capital (equipment or technology). However, in the long run, doubling the saving rate may lead to diminishing returns, as countries with already high levels of capital will see less impact from additional investment.
Meanwhile, doubling total factor productivity has a profound effect on economic growth. Productivity growth is the primary determinant of an economy's rate of long-term economic growth and higher wages, as it directly influences the efficiency and effectiveness of economic production. Moreover, productivity gains often come from technological innovation, which can stave off the diminishing returns associated with capital deepening. Thus, doubling total factor productivity is likely to have a more significant and sustainable impact on becoming richer in the long run compared to just doubling the saving rate.