Comparing the Macroeconomic Principles of a Developed and Developing Company

The two countries picked for comparison in this discussion is the United States of America (developed) and Kenya (developing). According to the World Bank, the United States registered an average 2.3 percent economic growth rate in 2019 (The World Bank, 2020). On the other hand, Kenya's economic growth averaged 5.7 percent in the same year, making it the largest economy in Eastern and Central Africa (The World Bank, 2020). Therefore, the average growth rate in Gross Domestic Product (GDP) in Kenya, a developing country, is almost tripled the U.S. GDP in the last year. The vast difference in the GDP growth rate has due to a variety of economic factors.

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One component of Kenya's fast-growing economy is the government's prioritization of developing large-scale infrastructure across the state. The government's continued investment in telecommunications, transport, and construction sectors and agriculture has helped stabilize public institutions and increase confidence in its economy. Many international organizations have expanded their operations in the country, constructing the country's tallest office buildings and developing large shopping malls. The resilient services sector, positive investor confidence, and a stable macroeconomic environment significantly contributed to the recent economic expansion (The World Bank, 2020).

On the other hand, the U.S. has been registering low levels of innovation with the latest ones like Twitter and Instagram, contributing very little despite being extremely popular among users. Instead of spending on research and development, most U.S. companies are just holding onto their billions of dollars of cash. Similarly, consumer spending has also been slowly recovering from the recession. Lastly, the increasing number of the aging population has also significantly contributed to low GDP growth. As individuals age, they retire and drop out of the labor force leading to a lower fraction of the working population, thus adding to the overall productivity.

Reference https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG https://www.worldbank.org/en/country/kenya/overview

The World Bank, (2020). GDP growth (annual %).

The World Bank, (2020). The World Bank in Kenya.