In 1950, residents in Liberia were wealthier than those in Taiwan. Today, per capita gross domestic product (GDP) in Taiwan is more than 20 times that of Liberia. Which of the following best explains why Taiwan is now so much wealthier than Liberia? options: a. All production in Taiwan is managed by the government, while in Liberia, the free market allocates resources. b. Taxes in Liberia are very high and prevent the economy from growing. c. Taiwan is a very large country with lots of resources, while Liberia is very small. d. Liberia does not trade with other countries, while Taiwan has many trading partners. e. Liberia lacks the sort of institutions that promote growth that Taiwan has.

Question

Skyla Lang

Business

22 June, 11:45

In 1950, residents in Liberia were wealthier than those in Taiwan. Today, per capita gross domestic product (GDP) in Taiwan is more than 20 times that of Liberia. Which of the following best explains why Taiwan is now so much wealthier than Liberia? options: a. All production in Taiwan is managed by the government, while in Liberia, the free market allocates resources. b. Taxes in Liberia are very high and prevent the economy from growing. c. Taiwan is a very large country with lots of resources, while Liberia is very small. d. Liberia does not trade with other countries, while Taiwan has many trading partners. e. Liberia lacks the sort of institutions that promote growth that Taiwan has.

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Addison Randall · Answer 1

Liberia lacks the sort of institutions that promote growth that Taiwan has

Explanation:

When growth process is institutionalised there is sustainability development of a country. But when there are no institutions to encourage growth then the economy declines.

Taiwan has a responsive government that proactively plans economic development into the future. The best way to do this is to imstitutuionalise the growth process. Resources are more efficiently used and waste is reduced.

If however the government spends indiscriminately, does not save, and does plan properly then economy will decline.

This is the case here where Taiwan has a GDP per capita that is 20 times that of Liberia