Assume that two countries both have the per-worker production function y = k^1/2, neither has population growth or technological progress, depreciation is 5 percent of capital in both countries, and country A saves 10 percent of output whereas country B saves 20 percent. If country A starts out with a capital-labour ratio of 4 and country B starts out with a capital-labour ratio of 2, in the long run:

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In the long run, the capital-labour ratio is determined by the savings rate and depreciation. Country A, with a 10% savings rate, will have a steady-state capital-labour ratio of 4, while Country B, with a 20% savings rate, will have a steady-state capital-labour ratio of 16.

Assume That Two Countries Both Have the Per-Worker Production Function