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Assignment - Blueland and Greenland GDP Questions
Description - Assume that Blueland starts off with a GDP per capita of 14,000 EUR and an annual growth rate of 6 percent p.a. and Greenland starts off with a GDP per capita of 28,000 EUR and an annual growth rate of 1 percent p.a.
A. Calculate the GDP per capita in 10 years in both cases.
B. Calculate in how many years Blueland will double its GDP per capita and reach the level of Greenland's GDP.
C. Based on this case explain the catch-up effect. Use the theory of diminishing returns to support your answer.
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