According to the convergence hypothesis, differences in GDP per capita among countries tend to narrow over time because countries that start with a lower real GDP per capita generally have which combination of growth rates?

• A. Higher, higher growth rates
• B. Higher, lower growth rates
• C. Lower, higher growth rates
• D. Lower, lower growth rates

Answer: (C)

Convergence in GDP per capita occurs because poorer economies tend to grow faster than richer ones, catching up as they adopt existing technology, investment, and institutions. This faster growth for the lower-income country, combined with slower growth for the higher-income country, narrows the income gap over time. In the usual way the options are ordered (richer country’s growth first, poorer country’s growth second), this means lower growth for the richer country and higher growth for the poorer country. That pattern explains why differences in GDP per capita tend to shrink, at least on average, though real-world factors can create exceptions.