The catch-up effect would be largest in an economy where:

Question

Quizplus · Accepted Answer

The catch-up effect refers to the phenomenon where low-income countries experience higher rates of economic growth and catch up to the levels of developed countries. This is because they have the potential to grow faster due to their lower initial level of capital, as they can take advantage of existing technologies and knowledge without having to incur the high costs of developing them from scratch. Thus, the catch-up effect would be largest in an economy where the initial level of capital is low, as it has more potential for growth.

The Catch-Up Effect Would Be Largest in an Economy Where