Convergence (economics)

The catch-up (also: catching- up effect ) describes the following observation: If we assume a given starting point, so reach poor economies tend to faster economic growth than richer countries.

Even very small investment in an underdeveloped economy would lead for example to the first tools that greatly improved production would be possible.

Basics of Catching up hypothesis

According to the neoclassical convergence hypothesis is due to different initial values ​​of capital intensity convergence ( convergence ) of the per capita income of economies instead. The Follower ( poorer economies ) has a lower capital intensity as a leader ( richer economies ) and thus there is a catch-up for the followers. The neoclassical theory of convergence is of Moses Abramovitz by so-called "social capabilities" perspective, ie an economy needs in order to participate in the catching-up process may have some basis ( legal security, human capital ... ). If open economies are present, an amplification of the catching -up process can occur through knowledge transfer, ie exchange of new technologies.