ecn102 HW 5 - 1. 1. Absolute Latitude: 2. 3. 4. 5. 6. 7. 8....

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1. 1. Absolute Latitude: Positive - The closer to the equator (the lower the absolute value of degrees from the equator), the lower the GDP per capita. This could be due to the fact that hot weather is terrible for growing agriculture products, and disease is more common among places close to the equator. 2. Population Density: Positive – The higher the population density, the more labor available to produce products and the higher the GDP per capita. 3. Average Annual Growth Rate of Population: Positive – High annual growth rate could lead to a higher GDP per capita, because more population means a larger work force to produce products, as well as a higher chance at making innovative discoveries/technological advances that would further increase production using the same amount of resources. 4. Logarithm of Real GDP per Capita: Negative - The log shows that for every 1% increase in real GDP per capita, there is a 1% decrease in the average annual growth rate of real GDP per capita. 5. Percent of Land Area near Navigable Water: Positive – The more land near water, the higher the GDP per capita, because the country has means a means of transportation to which they can outsource products that would be more expensive to produce in the country, and produce what they have comparative advantage in. Outsourcing leads to an increase in returns to scale. 6. Percent of Exports and Imports Relative to GDP: Positive – The more one imports and exports, the higher the GDP per capita, because they can specialize on what they have comparative advantage in, trade what they need for what they have excess in, thus boosting production overall using the same amount of resources. 7.
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ecn102 HW 5 - 1. 1. Absolute Latitude: 2. 3. 4. 5. 6. 7. 8....

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