Reference no: EM131565526

Suppose you live in a country called the United Federation of Republics, or UFR for short (I made it up). UFR is a wealthy developed nation with a high GDP per capita. The nation has a large national wealth with a big capital stock and high amount of physical capital per worker. They are high levels of human capital in the work force and the nation is known for its innovation and technological advances. While things have been positive overall, the GDP per capita growth rate has begun to slow a bit. The real GDP per capita growth rate was 3% a year from 1970 -2000. But since the year 2000, the rate has fallen to 2% year.

Now its election season in your country and there are politicians laying out their plans to keep UFR a prosperous nation and to push the growth rate back up to its previous levels.

One candidate, Mr. Jones, has a plan he says will push growth back to its previous level. His plan has 4 pillars. A summary of his plan and the four pillars is below:

Massive public capital projects:Mr. Jones plans to massively expand UFR's public physical capital. He plans on building additional highways, airports, and sea port, as well as additional power plants, and water treatment plants.

Limit foreign trade with emerging economies:There are some nations in the world growing much faster that UFR and Mr. Jones says the growth of these nations is a threat to UFR's standard of living; and that their growth is taking away from UFR's growth. To protect UFR's standard of

living he will limit the exports going to those countries and limit imports coming in from those countries.

Reduce the length of patents:Mr. Jones says patents are giving firms too much monopoly power. Currently the patent law in UFR gives the patent holder exclusive selling rights for 20 years. He wants to reduce that to only 5 years.

Nationalization of banking:Mr. Jones vows to institute a new banking system; one that is completely controlled by the government. He says the greed of the private, for profit banking industry is part of the reason the growth has slowed.

For this essay you are to evaluate Presidential candidate Mr Jones' plan to increase the economic growth rate. For each pillar/element of Mr. Jones plan, explain why it will or will not help increase the growth rate of GDP per capita and improve the standard of living in the country.

If you think the element will help you should explain the process by which these policies will speed up economic growth.

If you think the element will not help you should explain why it will not lead to faster economic growth.

Finally at the end of your essay give your overall assessment of the plan and any recommended changes you would make to improve the plan.