Some Data That at First Might Seem Puzzling: the Share

question 133

Essay

Some data that at first might seem puzzling: The share of GDP devoted to investment was similar for the United States and South Korea from 1960-1991. However, during these same years South Korea had a 6 percent growth rate of average annual income per person, while the United States had only a 2 percent growth rate. If the saving rates were the same, why were the growth rates so different?

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Definitions:

Liquidity

The ease with which an asset or an investment can be converted into cash without significantly affecting its price.

Net Income

The remaining earnings of a company post all tax and expense deductions from its total sales.

Common-Sized Income Statement

An income statement in which each line item is expressed as a percentage of sales, facilitating comparison across periods or companies.

Total Assets

The sum of all assets owned by a company, including current, non-current, tangible, and intangible assets.