Which one of the three hypotheses - culture, geography, or institutions - has the most support in the data as the main driver of economic prosperity

2. (a) Economic prosperity in the world are function of all three factors culture, geography and institutions. Neither geographical nor cultural nor institutional factors, if taken separately, is sufficient for long-term growth and development (i.e economic prosperity). Although the economic achievements depends on others factors to such as-environmental factors. The dynamic world has all three kinds of examples so it is very difficult to distinguish which one is the main hypothesis. One side cultural factors create hinderance to accepts new technology or systems other side some cultural factors itself a factor for productive change. Whereas, the geography hypothesis that holds natural resources accountable for economic performance and the institutions hypothesis that credits socio-economic conditions as the major determinants of economic progress. So, it is the proper balance among all hypothesis that may help best economic prosperity in the world economy. (b) A country is said to be balance growth path (BGP) if it holds 1. stable growth of output to labor ratio 2. stable output to labor or labor to output ratio 3. stable labor share to the cost 4. growth of output and capital stock same A European economy: g(w) = 0.03, g(K/Y ) = 0, g(L) = 0.01, g(Y ) = 0.04. has stable capital to output growth thus BGP. A Latin American economy: g(Y/K) = 0.01, g(L) = 0.02, g(Y ) = 0.03 and An Asian economy: g(K/Y ) = 0.09, g(L) = 0.03, g(K) = 0.18 have no BGP.

Which one of the three hypotheses - culture, geography, or institutions - has the most support in the data as the main driver of economic prosperity

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