Question

Use the Solow growth model to demonstrate how differences in population growth rates can cause highly-developed countries and lesser-developed countries to both grow at low rates and never converge. Include in your answer a description of the differences in population growth rates and illustrations of the consequences for long-run capital stock per worker, long- run output per worker, and the time paths of output per worker from the short-run to the long-run.

Answer 1

The development of the country depends upon many of the factors related to economy such as population of the country per capita income employment rate literacy rate infant mortality rate and many other factors such as GDP are directly responsible for the growth of the country and the nation the main reason of the the growth of nation is to improve the standard of living of each and every person and to remove the poverty from each and every section Growth comes from adding more capital and labour inputs and also from ideas and new technology.

Basic points for slow economic growth

1 slow model include sustaun Rise in capital investment increases the growth rate temporarily because the ratio of capital to labour goes up.

2 marginal product of additional unit of capital may decline economy moves back to a long-term growth path

with real GDP growing at the same rate as the growth of the workforce plus a factor to reflect improving productivity.

3 steady rate of economic growth when capital and labour are all growing at the same rate, so output per worker and capital per worker are constant.

4 the raise trend rate of growth requires an increase in the labour supply + ahigher level of productivity of labour and capital

5 Differences in the pace of technological change between countries are said to explain much of the variation in growth rates that we see.

The effect of population growth can be positive or negative depending on the circumstances. A large population has the potential to be great for economic development: after all, the more people you have, the more work is done, and the more work is done, the more value

Long run effect on growth

Long-run growth is defined as the sustained rise in the quantity of goods and services that an economy produces. The GDP of a country is closely tied to the growth of the population in addition to prices and supply and demand.

1 Growth of productivity

In long run the growth is determined by the productivity rate icreasing production the GDP will increase and the productivity rate will increase the growth of nation.

2 Demographic changes

demographicfactors influence economic growth by changing the employment to population ratio. Factors include the quantity and quality of available natural resources.

3 Labor force participation

theamount of labor force participation and the size of economic sectors influence economic growth. The labor force participation is the amount of workers available. In countries with high development and industrialization, labor force participation is high because of low birth and death rates.