Question

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? (Note: this is asking about how much growth happened over the five year period but then you divide by five to find the average annual growth). (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%.

Answer 1

a)

Let the country be: GHANA

The GDP of an economy gives the value of goods and services produced within the border of the country during a particular period of time. The GNI is the income generated by the residents of the country net of foreigners irrespective of the border of the country. GDP is calculated as GNI-NFIA, where NFIA is the net factor income from abroad.

The GNI and GDP of 2012 for Ghana is given as

Year	GDP (current US$)	GNI (current US$)
2012	41939728979	39809765731

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b)

The GDP in Ghana increases from $32174772955.9748 in 2010 to $ 49181854798.2552 in 2015. The total growth rate is:

Therefore, the average annual growth rate: 10.6%.

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c)

At a rate of gt the projected GDP in t years is

Assuming GDP0=41939728978.7281 and gt=0.106

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d)

With 4% extra growth rate the annual growth rate is 14.6%. The projected GDP is given in the table below

Year	Projected GDP
20	640203394124.73
50	582839334796007.00