Answer Happy

Consider Figure 1 Growth rate, 1960-2000 0.06 South Korea Hong Kong Chao Malaysta Barbados Israel U Thailand Japan 0.04 Indonesia Ireland Mauritius Portugal Belgium Luxembourg Brazil Pakistan . India Chile Netherlands Canada United States Lesotho France Denmark 0.02 Zimbang Mexico United Kingdom Australia Sweden Switzerland Costa Rica Kenya Jamaica New Zealand South Africa Argentina Ethiopia Equatorial Guinea 0.00 Burundi 20 Guinea Comoros Togo Venezuela Nigeria Mocambique Madagascar Niger Nicaragua -0.02 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Per capita GDP, 1960 a) Using the Solow model, explain clearly in point form how this Figure arises i.e., for a random collection of countries in the world, there is no relationship between income level and subsequent growth. b) Using the Solow model, explain briefly two ways Niger would be able to attain the income level of Switzerland.