The share of income going to physical capital in both Colombia and Costa Rica is about 10%, so we can represent the production function for real GDP per worker as y = Ak1/10. The capital–labor ratio is $15.25 for Colombia, and it is $23.12 for Costa Rica. Real GDP per worker is $12.18 in Colombia and $13.31 in Costa Rica.
a. Calculate total factor productivity for each country.
b. Calculate the return on capital in each country