3.5 Working with macroeconomics data: PPP GDP per capita of countries around the world

Sustained growth in GDP continues to be a primary predictor for improvements in quality of living. Small differences in growth rates over times can lead to significantly different outcomes. This lab explores these questions:

• How are these differences measured?
• How are the outcomes compared?

Step 1: Download the data

Download data about the real GDP per capital of two countries from 2000 to the most recent year available.

1. Go to the World Development Indicators.
2. In the Variables tab, make the following selections:
   • Database: Check World Development Indicators (this is the default value)
   • Country: Click the X to unselect all. Then select Canada and a country starting with the first letter of your first name. (If there is no data for this period for a country that starts with the first letter of your name, choose a country starting with the next letter in the alphabet.)
   • Series: Click the X to unselect all. Then select GDP per capita, PPP (Constant 2017 International $).
   • Time: Click the X to unselect all. Then select 2000 and the most recent year (e.g., 2023).
3. In the Layout tab, make the following selections:
   • Orientation
   • For Time, select Row.
   • For Series, select Row.
   • For Country, select Column.
4. In the pop-up window, click Apply changes.
5. Click Download options and choose Excel.
6. In the Preview section, click GDP per capita, PPP, Constant 2017 International $ and read the definition of GDP per capita, PPP (constant 2017 International $).
7. Read the first paragraph of Purchasing Power Parity for a definition.

Step 2: Calculate the annual growth rates and generate the graph

1. In your Excel workbook, calculate the year-to-year real GDP per capita growth rate for both countries using formulas.
2. Generate a graph showing the GDP per capita and its growth rates over time for the country of your choice. The graph in Figure 3.1 is an example.
   • The graph should have years on the x-axis, and it should have two y-axes.
   • The left y-axis should show real GDP/capita. Consider changing the starting value of your y-axis to show your data clearly.
   • The right y-axis should show growth rate. Make sure it is clear what each axis represents.
   • Use two different chart types for the real GDP per capita and its growth rate.
3. Analyze your graph. What can you say about the trend of the economic growth of the two countries?

Figure 3.1

Canadian Real GDP per Capita and its Growth Rate

Step 3: Calculate compound growth

1. Calculate the average annual compound growth rate from 2000–2022 for Canada. Hint: A country grew x% every year to go from the GDP per capita for 2000 to that of 2022. There are 22 periods from 2000–2022.
2. Repeat the process to calculate the average annual compound growth rate from 2000–2019 and from 2020–2022. Apply the rule of 70.