Question

The logic behind the catch-up effect is that a. workers in countries with low incomes will work more hours than workers in countries with high incomes. b. the capital stock in rich countries deteriorates at a higher rate because it already has a lot of capital. c. new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital. d. None of the above is correct.

Answer 1

Answer:

new capital adds more to production in a country that doesn't have much capital than in a country that already has much capital

Explanation:

• The catch-up effect is explained by the convergence principle that the rate of growth in the per capita income of poor economies is higher than the rate of growth of the per capita income of rich economies, which ultimately leads to the end of the two economies.
• This theory is supported by the law of low returns because diminished returns are stronger in capital-intensive countries than in capital countries, which cannot be classified as capital-intensive to develop.
• The growth rate of emerging economies is higher than that of developed economies. In addition, the costs of research and development of emerging economies are low because they can simulate technology and processes from developed economies. all economies will transform into a global culture.