Question

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6. In 2012, Ireland's real GDP was 228 Billion in US dollars, while Bulgaria's was 51.6 Billion in US dollars. From 2012 to 2017, Ireland averaged a real GDP growth rate of 7.89 percent, while over the same period, Bulgaria averaged a real GDP growth rate of 2.35 percent. Is this growth experience consistent with the Convergence Hypothesis? Explain your answer. 5 points.

Answer 1

No, the growth experienced by both countries is not consistent with the Convergence Hypothesis.

The convergence hypothesis (theory) or the catch-up effect says that a poorer country's economy tends to grow at a faster rate than a developed country,as a result of which all countries should eventually converged in terms of per capita GDP. In 2012, Ireland seemed more developed, reflected by a higher GDP, while Bulgaria was still a developing country.
That being said, the average growth rate of GDP should have been higher for Bulgaria from 2012 to 2017. Since, it's the complete opposite, hence, the convergence hypothesis does not hold true in this case.