Convergence (economics)
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The idea of convergence in economics (also sometimes known as the catch-up effect) is the hypothesis that poorer economies' per capita incomes will tend to grow at faster rates than richer economies. As a result, all economies should eventually converge in terms of per capita income. Developing countries have the potential to grow at a faster rate than developed countries because diminishing returns (in particular, to capital) are not as strong as in capital-rich countries. Furthermore, poorer countries can replicate the production methods, technologies, and institutions of developed countries.
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See also
- The Next Convergence by Michael Spence (Nobel Laureate, 2001)
- Economics
- Investment
- Return on investment
- Productivity
- Productivity improving technologies (economic history)
- Emerging nation
- Sow's ear effect
- Endogenous growth theory
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