Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (2nd Edition)
2nd Edition
ISBN: 9780134641904
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Chapter 7, Problem 6Q
To determine
The reason for the divergence in per capita GDP of both South Korea and North Korea.
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After World War II, Germany was divided into two parts, the German Democratic Republic (informally known as East Germany) and the Federal Republic of Germany (West Germany). East Germany was controlled by the former Soviet Union, while West Germany was controlled by the other Allied governments: the United States, the United Kingdom, and France. The war had destroyed most of Germany’s economy. The Soviet Union as well as the Allied occupation forces sought to rebuild the economies of their respective parts. Before the fall of the Berlin Wall reunited East and West Germany in 1990, West Germany’s economy grew at an annual average growth rate of 4.4 percent, which was about 3 times higher than East Germany’s rate. Draw the parallel between the natural experiment discussed in the chapter and the case of East and West Germany. Based on the information given in the question and your own research, why do you think two otherwise similar areas had such divergent growth rates?
Chapter 7 Solutions
Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (2nd Edition)
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