The catch-up effect says that countries with low income can grow faster than countries with higher income. However, in statistical studies that include many diverse countries we do not observe the catch-up-effect unless we control for other variables that affect productivity. Considering the determinants of productivity, list and explain some things that would tend to prohibit or limit a poor country’s ability to catch up with the rich ones. A country may be restricted by its natural resources. This would limit productivity and there really isn’t much a country can do to change their natural resources, especially if it doesn’t have enough money to import them from other countries. Also, poor healthcare is an ongoing cycle that limits productivity and prevents a poor country from catching up to a rich country. As people can’t afford adequate health care, human capital and productivity go down. As productivity goes down, healthcare becomes worse, which in turn causes productivity to decrease even more.

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