If a low-income country achieves the same rates of saving, depreciation, and population growth as a high-income country, and it raises its rate of technological progress to exactly that of the high-income country as well, then the Solow growth model predicts that the low-income country will:

Question

Quizplus · Accepted Answer

The Solow growth model predicts that if a low-income country achieves the same rates of saving, depreciation, population growth, and technological progress as a high-income country, it will grow at the same rate as the high-income country in the long run, leading to conditional convergence. This means both countries will grow at the same rate, but it does not necessarily imply that the low-income country will reach the same level of income as the high-income country.

If a Low-Income Country Achieves the Same Rates of Saving