Answer: Catch-up effect
Explanation: The catch-up effect is also known in economics as the theory of convergence. It is a theory that is based on the law of diminishing marginal returns which states that It is based on, among other things, the law of diminishing marginal returns, which states that a country benefits slightly less from an investment for every time that country invests. This means that returns on capital investments in capital-rich countries such as Japan are not as strong as they would be in developing countries such as Ethiopia.
The catch-up effect is the theory speculating that poorer economies will grow more quickly than wealthier economies, resulting in a convergence in terms of per capita income. In simpler terms, the poorer economies will "catch-up" to the more healthy economies.
While poorer countries are able to get more returns on their investments, and are able to replicate production methods and technologies of richer countries, including opening up their economies to free trades resulting in faster economic growth than more economically advanced countries, however, the limitations posed by a lack of capital can greatly reduce a developing country's ability to catch up.
There are a lot of factors that are responsible for the growth of a company. The catch-up effect best explains why Ethiopia (a poor country) is able to achieve a high growth rate.
Ethiopia's economy is known to have risen due to an increase in industrial activity such as investments in infrastructure and manufacturing.
Conclusively, Their economy has shown to have been strong, broad-based growth with a percentage of about 9.4% a year ranging from 2010/11 to 2019/20.
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