We are taught in level 2 economics curriculum that as per neoclassical model the developing countries will converge to growth rates of developed countries as developed ones will be sitting on steady state growth rate and developing ones will be having high rates of growth when capital to labour ratios are low and then becoz of this phenomenon they will converge to growth rates of developed countries.
So steady state growth rate should be same for all countries around the world because in the end developing countries also having high growth rates will decline to steady state growth rates .
But i see that steady state growth rate is different for all countries.
- Why is this so?
That’s due to technological advancements. You’ve come across this, as per Neoclassical the way for developed nations to keep growing after reaching the steady state is invest in R&D so that technologies can be build up which can then make you grow.
I hope my explanation brings clarity to you. Thank you!