The convergence hypothesis assumes that industrialized countries will grow at a slower rate because:

Question

Quizplus · Accepted Answer

The convergence hypothesis suggests that as countries become more industrialized and their levels of capital per worker increase, the marginal gains from additional investment decrease. This leads to a situation where maintaining or increasing growth rates requires progressively larger investments, particularly to replace aging or obsolete capital. This is in contrast to less developed countries, where lower levels of capital per worker mean that smaller investments can yield higher returns, potentially allowing them to grow at a faster rate and "converge" with the more developed economies over time.

The Convergence Hypothesis Assumes That Industrialized Countries Will Grow at a Slower