Create a new table that contains only the last three columns of the table in exercise 5. This time, instead of reporting the numbers relative to the U.S. value, report the inverse of these numbers. For example, you should have found that per capita GDP in Kenya relative to that in the United States was 0.057. Now express this number as the ratio of U.S. per capita GDP to Kenya’s per capita GDP: 1/0.057 ≈ 17.5. Fill in all three columns for the remaining countries.
(a) Explain in general how to interpret these numbers and in particular how the three columns are related.
(b) In the chapter, we found that about one-fourth of the differences in per capita GDP across countries were due to differences in capital per person and about three- fourths were due to differences in TFP. Carry out this calculation for Kenya. The United States is 17.5 times richer than Kenya; what fraction of this factor of 17.5 is due to differences in capital per person and what fraction is due to differences in TFP?
(c) Repeat part (b) for Ethiopia.