2 marksEconomics of Growth and DevelopmentTheories of developmentStages of economic growthModerateabout 2 min

IIT JAM 2022 Question 52: Theories of development

Per capita GDP of India and USA grow at 8.8% and 1.8% per year. In 2019-20, US per capita GDP was USD 41099 and India's was USD 1570. If both keep growing at these rates, India's per capita GDP will equal that of the USA in _______ years (round off to 2 decimal places).

Answer and worked solution

Answer: 45.00 to 50.00

Set the two per capita paths equal: $1570(1.088)^t = 41099(1.018)^t$ , so $\left(\dfrac{1.088}{1.018}\right)^t = \dfrac{41099}{1570} = 26.18$ .

Taking logs, $t = \dfrac{\ln 26.18}{\ln(1.088/1.018)} = \dfrac{3.2649}{0.0665} = 49.10$ years, within the accepted range.

Theories of development has come up 59 times in 6 exams since 2010.

What this question tests

This question is on Stages of economic growth, part of Theories of development in Economics of Growth and Development.

Rostow's account of how societies move from tradition to mass consumption.

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