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In economics, ______________says that poorer economies' per capita incomes will tend to grow at faster rates than richer economies.
Divergence theory
Consensus theory
Metropolitan and Satellite theory
Convergence theory
The idea of convergence in economics (also sometimes known as the catch-up effect) is the hypothesis that poorer economies' per capita incomes will tend to grow at faster rates than richer economies. As a result, all economies should eventually converge in terms of per capita income. From the survey 2017-18: Convergence happens essentially through trade and through mobility of factors of production. If a state/country is poor, the returns to capital must be high and should be able to attract capital and labor, thereby raising its productivity and enabling catch up with richer states/countries. Trade, based on comparative advantage, is really a surrogate for the movement of underlying factors of production as Samuelson pointed out early on. A less developed country that has abundant labor and scarce capital will export labor-intensive goods (a surrogate for exporting unskilled labor) and imports capital-intensive goods (a surrogate for attracting capital).
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