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Diminishing Returns and Catch Up Theory


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1) Explain the connection between the concept of diminishing returns of capital and the catch-up theory of development.

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The catch up theory of development states that after leading countries develop to a certain point, less industrialized nations can catch up to this same point with relative ease simply by emulating the steps taken by the leading nations. In other words, if you have two agrarian nations and one begins the process of industrialization and continues this course for 50 years, the second nation could, most likely, begin industrialization and 'catch up' to the ...

Solution Summary

The solution connects the Law of Diminishing Returns with the Catch Up Theory of Development