catch-up line  the downward-sloping relation between the level of productivity and the growth of productivity predicted by growth theory.
developing country  a country that is poor by world standards in terms of real GDP per capita.
economic development  the process of growth by which countries raise incomes per capita and become industrialized; also refers to the branch of economics that studies this process.
foreign direct investment  investment by a foreign entity of at least a 10 percent direct ownership share in the firm.
growth accounting formula  an equation that states that the growth rate of productivity equals capital’s share of income times the growth rate of capital per hour of work plus the growth rate of technology.
informal economy  the portion of an economy characterized by illegal, unregulated businesses.
International Monetary Fund (IMF)  an international agency, established after World War II, designed to help countries with balance of payments problems and to ensure the smooth functioning of the international monetary system.
portfolio investment  investment by a foreign entity of less than a 10 percent ownership share in the firm.
World Bank  an international agency, established after World War II, designed to promote the economic development of poorer countries through lending channeled from industrialized countries.