Based on Mankiw Romer and Weil (1992) with conditional convergence holding fertility rates, education and government spending as a share of GDP constant ?
Correct answer: B. income per capita in poor countries grows faster than in rich countries
- A. income per capita is the same regardless of poor or rich countries
- B. income per capita in poor countries grows faster than in rich countries
- C. income per capita in rich countries grows faster than in poor countries
- D. income per capita in poor countries grows conditional upon foreign aid
Explanation
Conditional convergence means that when countries have the same fertility, education and government-spending conditions, poorer countries tend to grow faster toward the same steady-state income. This is convergence conditional on structural factors, not unconditional equality of incomes.
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