Question

Based on information from the World Bank, in 2016, GDP per capita was $57,467 in the United States and $59,977 in Iceland – very similar values (and high values compared to many countries).

But, the annual rate of GDP growth averages 0.9% in the United States and 6.1% in Iceland. Would you predict the United States or Iceland to have a more rapid increase in the standard of living in the long run?

Discuss what evidence/theory to support this prediction.

Answer 1

Iceland which was one of the poorest countries of Europe had not only developed but had set an example in the field of development. It was the 7th most productive country and 5th most productive based on GDP. Proper utilization of hydroelectric and geothermal power had made Iceland the world largest electricity producer. The way Iceland had been working on its development soon its gona beat every other economy in the field of development. It wont be wrong to say that might be in the long run it will have better standard of living.. but on the contrary US is a vast economy and well developed so has higher chances to have a rapid increase in standard of living in long run.