The observation that poorer nations grow more rapidly than richer ones if they share the same steady state,and more slowly if they don't,is known as
A) conditional convergence
B) spillover
C) learning by doing
D) the poverty trap
E) the iron law of convergence

Question

Quizplus · Accepted Answer

This statement refers to the concept of conditional convergence, which states that countries with lower income levels will grow at a faster rate than richer countries if they share similar characteristics such as institutions, technology, and human capital. However, if these countries have different factors driving their growth, then the convergence may not occur. Thus, choice A is the best answer. Spillover (B) refers to the positive externalities that one economic agent can have on another, such as knowledge spillovers from universities to nearby businesses. Learning by doing (C) refers to the idea that individuals and firms acquire knowledge and skills through repeated experience. The poverty trap (D) refers to the vicious circle of poverty, where individuals and communities are unable to escape poverty due to factors such as lack of access to education, healthcare, and financial resources. The iron law of convergence (E) is not a widely recognized concept in economics.

The Observation That Poorer Nations Grow More Rapidly Than Richer