Consider two economies, 1 and 2. Both economies have a production function of the type Y = ÀK1/3 L2/3. The two economies have the samelabor force, L1= L2= 1. The capital stock in country 2 is 8 times largerthan the capital stock in country 1 the GDP in country 2 is 6 time larger than GDP in country 1. How mach (in percentage terms) of the GDP differences across countries 1 and 2 are explained by TFP differences relative to capital differences?
