Impact of Productivity Differences on Economic Growth

Medium Economic Growth And Development Productivity

In the context of economic growth and development, productivity is a critical factor that affects the output and overall economic health of a nation. Consider the following scenario involving two countries, A and B. Country A has invested heavily in technology and workforce training, leading to substantial improvements in its labor productivity. In contrast, Country B has maintained its traditional agricultural practices, with little to no investment in productivity-enhancing technologies.

Which of the following statements best summarizes the implications of the differences in productivity between these two countries?

Country A will likely grow faster than Country B because higher productivity leads to increased output and higher standards of living.

Country B's traditional practices will ultimately allow it to sustain its economy better than Country A's reliance on technology.

Both countries will experience similar growth rates as productivity does not significantly impact economic growth.

Hint

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