Question

The following table depicts statistics on GDP per capita (ie, GDP/population) in column (1) and its growth rate for the country groups (column 2) defined by GDP levels (High-income, Middle-income and Low-income). They are all expressed as real (constant) GDP.

	A	B	C
Country group	GDP per capita (Year 2010)	Average annual growth rate of real GDP per capita (Year 2000-2010)	GDP per capita (Year 2088)
High-income	38,293	0.9%	77024.76
Middle-income	3,980	4.8%	154192.5
Low-income	507	3.0%	5085.24

Throughout this question, assume constant growth rates for each of the country groups that are equal to their average value between year 2000 and 2010 (column 2 of Table).

1. Compute the approximate number of years it will take the Low-income and Middle-income countries to double their GDP per capita.

Answer 1

It is unclear whether Rule of 72 or Rule of 70 is to be used, so I'm computing the values using both rules.

(1)

(A) Using Rule of 72, Doubling period = 72 / Annual growth rate of real GDP per capita

Low income countries: 72 / 3 = 24 years

Middle income countries: 72 / 4.8 = 15 years

(B) Using Rule of 70, Doubling period = 70 / Annual growth rate of real GDP per capita

Low income countries: 70 / 3 = 23.33 years

Middle income countries: 70 / 4.8 = 14.58 years