Because technology is crucial to productivity growth, the latter will decline. Conditionality in loans means that some degree of reform is required to get investment funds. Reform should encourage markets and individual property rights, important factors in growth. As worldwide savings rates fall, catch-up will decrease as foreign investment falls in developing countries, reducing productivity growth. High tariffs lead to a decrease in catch-up because imports such as capital goods or technology are more costly.
Import substitution occurs with the accompanying inefficiencies.
Catch-up will increase as the rights of entrepreneurs are protected because incentives are enhanced and risk reduced. Catch-up should decrease as armaments displace spending on more productive investment and increase instability. An increase in human capital will promote an increase in catch-up because the capital used by an educated, skilled work force is more productive. Malthus predicted that output could not be sustained above the subsistence level. If by chance food production rose above subsistence, the population would increase beyond what was available to feed it.