The charts above show the growth of real GDP per capita in three pairs of geographically adjacent countries: North and South Korea, Argentina and Chile, Zimbabwe and Botswana (using data from the Penn World Table).
(a) Which country in each pair experienced faster growth in GDP per capita? Which one is now richest?
(b) The World Bank's World Governance Indicators for each country in 2000 were as follows (higher is better): Based on these data, do you think institutions can explain the divergent outcomes in these countries? Explain. Why do you think it helps to compare countries that are physically contiguous?