In: Economics
Some low-income countries and middle-income countries around the world have shown a pattern of economic convergence with high-income countries. What is this? Illustrate with an example.
Economic convergence is a hypothesis that holds that poorer nation's par capita income grows at a faster rate than richer nation's per capita income, hence, over time poorer nation's per capita income tends to converge with the per capita income of richer nations.
Example: In 2016, the GDP (real) per capita growth rate for India (a lower-middle income country) was 5.88% while that of US (high income nation) was 0.78% (source: world bank data).
Attributions: This trend could be attributed by several factors: