Question

Other things equal, relatively poor countries tend to grow Group of answer choices slower than relatively rich countries; this is called the poverty trap. slower than relatively rich countries; this is called the fall-behind effect. faster than relatively rich countries; this is called the catch-up effect. faster than relatively rich countries; this is called the constant-returns-to-scale effect.

Answer 1

faster than relatively rich countries; this is called the catch-up effect.

Step-by-step explanation:

Also know as theory of as theory of convergence. Which assumes the GDP per capita should equalize in the future.

The reasoning is based at the law of diminishing marginal returns.

As the rich countries have a more resources the return on additional units of resources is lower than if the same amount of resources is added to a poor country.

By opening the economy to free trade the poorest country can attract new capital as it will offer more return than a rich country would. Thus, with foreing investment and new technologys their grow rate will be higher than a rich country which already have this technologys,