What Is The Catch-Up Effect? The catch-up effect states that all economies will eventually level out since underdeveloped countries tend to grow more rapidly than wealthier ones. In other words, the national income level of poorer countries will catch up to those of richer countries because they grow faster.

Due to how little access poorer countries have to capital, small increases mean large gains in productivity. In richer countries, due to the availability of capital, the same amount of productivity requires a significant amount more capital.

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