Conditional Convergence

What is conditional convergence?

This term is used to refer to how poor countries tend to grow faster than rich countries, converging to similar levels of income.

As you might guess, conditional convergence only applies to countries with similar institutions. If two countries have vastly different institutions, it’s unlikely their levels of income will converge.

But does this theory hold true? In this video we take a look at the 20 founding members of the OECD -- all with similar institutions -- to see whether we observe conditional convergence among the group.

To learn more about the role institutions play in economic growth, check out the Wealth of Nations and Economic Growth section in MRU’s Principles of Macroeconomics course.