Catch up Effect

Catch up Effect can be alternatively called theory of convergence. It states that poor and developing countries outgrow faster than developed economies and, gradually, can reach the same results as developed countries have already reached (speaking of the levels of per capital income, standards of living, etc.).

There are many examples of the countries that managed to reach the developed countries in their economic indicators.

  • The East Asian Tigers managed to catch up the developed economies in the 1960s and 1970s.
  • In the post-war period (1945-1960) Germany, France, and Japan showed a huge breakthrough in the economy sphere.

This proves the fact that during some developing economies are able to effectively use all the available advantages to grow much faster and catch up with strong economies, this is not entirely true for the rest part of the developing world.

Still, the fact that a country has problems in the economy doesn’t guarantee the catch-up effect. A country has to be flexible, adjust to the new tendencies, supplies, technologies, methods of production, world’s economic situation and global market, attract capital, etc.