Evaluate this statement It is highly likely that developing

Evaluate this statement, “It is highly likely that developing countries will converge with developed countries in the near future.” Identify and briefly discuss the conditions under which this statement would be true.

Solution

Developing countries grow faster than developed countries which results in all economies to end up with steady state. This happens due to the two reasons which are- diminishing returns and replication of technology.

Diminishing returns starts when certain level of inputs has been used. Marginal productivity starts falling after a certain level. Developed countries have already used their units while developing countries have not reached that level due to underutilization of inputs.

Also developing countries can replucation production methods and technology without investing much time in developing them.

These conditions allow developing countries to grow faster than developed countries. This leads to convergence with developed countries or catching up with developed countries\' steady states.