Definition of Catch-up effect:
The catch-up effect is a theory speculating that poorer economies tend to grow more rapidly than wealthier economies, and so all economies will eventually converge in terms of per capita income. In other words, the poorer economies will literally "catch-up" to the more robust economies. The catch-up effect is also referred to as the theory of convergence.
The catch-up effect, or theory of convergence, is predicated on a couple of key ideas.
A theory postulating that a convergence occurs between poorer economies and wealthy economies in terms of national income due to an acceleration of growth as poorer economies catch up in their use of technology. Economies with more established levels of productivity tend to grow more slowly than smaller economies that require much less capital to make significant gains.
How to use Catch-up effect in a sentence?
- It is based on, among other things, the law of diminishing marginal returns, which states that a country's returns on its investment tend towards becoming less than the investment itself as it becomes more developed.
- The catch-up effect refers to a theory speculating that poorer economies will grow more rapidly than wealthier economies, leading to a convergence in terms of per capita income.
- Developing nations can enhance their catch-up effect by opening up their economy to free trade and developing "social capabilities," or the ability to absorb new technology, attract capital, and participate in global markets.
Meaning of Catch-up effect & Catch-up effect Definition