Robert Barro's empirical findings that countries with higher levels of investment will achieve a steady state with a higher per-capita income but not with a higher growth rate supports
A)the notion of absolute convergence
B)the notion of conditional convergence
C)the predictions of the endogenous growth theory
D)the belief that a high savings rate is not beneficial for any nation
E)the belief that technology is not very important

Question

Quizplus · Accepted Answer

Barro's empirical findings support the notion of conditional convergence, which suggests that countries with lower initial levels of income will grow faster and eventually catch up to countries with higher initial levels of income, as long as they have similar institutions and policies. However, the convergence will not occur indefinitely and convergence to a higher steady state level of per-capita income is achievable only if the country has a higher level of investment. This fits with Barro's finding that higher levels of investment lead to higher steady-state levels of per capita output.

Robert Barro's Empirical Findings That Countries with Higher Levels of Investment