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Why developed countries have income per capita much higher than developing countries? Use economic growth Solow...

Why developed countries have income per capita much higher than developing countries? Use economic growth Solow model to explain.

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Answer - As per the solow model of the economic growth , the growth of the economy depends upon the level of output growth , the level of technological progress and the savings rate , level of consumption etc. In the developed countries , the output is higher than the developing country , the state of technology is much improved , people have high level of income and savings. The consumption is also standard as compared to the developing country . Also the level of population is also low in comparison to developing country . Thus higher income divided by low population will lead to higher per capita GDP in the developed country

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