What causes poor countries to be able to catch up with rich countries?
The catch-up effect is a theory that all economies will eventually converge in terms of per capita income, due to the observation that poorer economies tend to grow more rapidly than wealthier economies. In other words, the poorer economies will literally “catch-up” to the more robust economies.
What are some of the ways that economic growth can be achieved?
Economic growth is driven oftentimes by consumer spending and business investment. Tax cuts and rebates are used to return money to consumers and boost spending. Deregulation relaxes the rules imposed on businesses and have been credited with creating growth but can lead to excessive risk-taking.
What are the top 3 factors for economic growth of a country?
There are three main factors that drive economic growth:
- Accumulation of capital stock.
- Increases in labor inputs, such as workers or hours worked.
- Technological advancement.
What factors will stimulate economic growth in a country?
Six Factors Of Economic Growth
- Natural Resources. The discovery of more natural resources like oil, or mineral deposits may boost economic growth as this shifts or increases the country’s Production Possibility Curve.
- Physical Capital or Infrastructure.
- Population or Labor.
- Human Capital.
- Technology.
- Law.
What is the benefit of economic growth for the poor?
Economic growth enables consumers to consume more goods and services and enjoy better standards of living. Economic growth during the Twentieth Century was a major factor in reducing absolute levels of poverty and enabling a rise in life expectancy.
What causes poor economic growth?
high inflation during crisis periods; high levels of population growth; high and persistent levels of inequality (incomes and assets), which dampen the positive impacts of economic expansion; and. recurrent shocks and exposure to risks such as economic crisis, conflicts, natural disasters,and “environmental poverty.”
How does population growth affect poor countries?
Rapid population growth stretches both national and family budgets thin with the increasing numbers of children to be fed and educated and workers to be provided with jobs. Slower per capita income growth, lack of progress in reducing income inequality, and more poverty are the probable consequences.