Suppose that both Mexico and the U.S. had roughly equal GDP per capita income in the year 1800 at $1,000 apiece. Over the course of 100 years Mexico’s GDP per capita growth rate was 2% while the U.S. growth rate was 3%. By the year 1900 the U.S. GDP per capita was $19,218, while Mexico’s was only $7,244.

Questions:

Briefly describe in a paragraph or two, what “phenomenon” is causing such differences in GDP per capita over the 100 year period. Specifically, give me a brief description of what is causing this phenomenon to occur. You may type out a brief mathematical explanation to help explain, such as the one explained in one of the online lecture videos, but it is not necessary to receive full credit.

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