The Global Economy

Population and Economic Growth 1. This question concerns the timing of the demographic transition in various countries. I have selected three representative countries: the Netherlands, Bangladesh, and Nigeria. Please watch the following videos and then answer the questions based on those videos/graphs. Note that the size of the bubbles represents the relative populations. The transparent bubbles in the graph are other countries that I deselected but you can move the mouse cursor over them to see which they are. Video 1: Child mortality trends Video 2: Total fertility rate (a) When did the child mortality level begin to fall rapidly in each of the three countries? (b) When did the total fertility level begin to fall in each of the countries? (c) How long was the delay between the former and the latter for each country? (d) Based on your answer to the last question, which stage of the demographic transition would you say each country is? 2. Pick any country in the world. (a) Identify its level of GDP and GNI per capita for 2012. Which is higher? What’s the difference? (b) Pick either GDP or GNI. What has been this country’s average growth rate of this variable for the last 5 years? (c) Calculate what projected GDP/GNI per capita will be in 20 years assuming this growth rate trend continues? What about in 50 years? (d) Recalculate this projected GDP/GNI per capita in 20 and 50 years using a new growth rate that is the current five year trend plus an additional 4%. 3. Suppose that the country of Xanadu saves 20% of its income and has a capital-output ratio of 4. (a) Using the Harrod-Domar model, calculate the rate of growth of total GDP in Xanadu. What assumption do you need to make to answer this? (b) If population growth were 3% per year and Xanadu wanted to achieve a growth rate per capita of 4% per year, what would its savings rate have to be to get this growth rate? 4. Suppose that two countries, A and B, have the same rates of investment and depreciation, the same levels of productivity, and the same levels of output per worker. They differ, however, in their rates of population growth. The growth rate of population in Country A is greater than in Country B. According to the Solow model, which country should have a higher growth rate of output per worker?                                                                

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