Sources used in this document:

As noted above, the actual GDP (annual %) in China rose between the years of 2001 and 2005 steadily and to the end of a 3% point increase. This is a point of reference for the developing nation as compares to the relatively industrialized and fully globalized Canada. According to the World Bank, Canada's actual GDP rates during this period were 1.8, 2.9, 1.9, 3.1 and 3.0. We note several distinctive differences immediately between these indicators and the index produced in China during the exact same period.

Before considering these differences in greater detail, we consider the divergent starting points of the two nations in consideration. According to the World Bank, the GNI per capita, PPP (current international $) may help to underscore the two distinct trends. In China, this number is presented according to world currency standards as $2,948,848,362,904.5 whereas in Canada, this index produces the figure of $851,322,906,082.9. Both figures are drawn from the year 2000 and precede the differing rates of growth between the two nations. Here, we are in the unusual scenario of examining a developing nation whose GNI is significantly higher than that of the developed nation considered. The Solow model helps to bring clarity to this discussion by revealing that with the addition of labour to the equation examining per capita growth, we can understand with greater accuracy the GDP growth there experienced. The enormity of China's economy is driven by this principle, with the Solow model offering the equation of k=K/L as a way of deteriming where K. is technology and L. is labour and where both produce diminishing returns alone but constant returns when combined. (Ghosh, lec3-4.2, p. 33)

Here we gain some explanation for China's greater potential for short-term growth, with its greater labour pool and the more novel infusion of global technology opportunities helping to stimulate a greater and more constant rate of growth for the massive developing nation. To this point, across the years of 2001 and 2005, the average rate of growth for Canada is .24%. For China, the average rate of growth is .6%. Given the relationship between labour and technology and all that we have learned about China's dramatic gains in these areas across the last decade, it is as anticipated that its growth has been faster, greater and of a more constant nature than that seen in Canada. This confirms the initial assumptions of the Solow model, illustrating that when external forces such as the influx of new technologies combine with an already expansive labour force, the opportunity for a more sustained type of growth becomes probable.