In light of continued strong economic growth in emerging countries such as China and India and stagnant growth in much of the Euro zone, use economic theory to explain (I) why countries experience different growth rates, and (II) why we might expect poor countries to grow more quickly than rich countries.

There is a huge diversity of how economies expand. Some countries manage to grow at a remarkably fast pace, while others suffer failures almost every time they attempt to improve. In order to explain why countries experience different growth rates and also why poor countries experience growth at a faster rate than rich countries one will have to take a look at the economic theories for this aspect.
Firstly, economic growth can be defined as the increase of goods and services, which an economy produces over time. The first theory to go through is the traditional growth theory, which concentrates on the accumulation of physical capital, which explains why some countries are much wealthier now than a century ago. That only scratches the surface, however, as modern economies differentiate from those a century ago, due to the advance in technology resulting in better infrastructure and machinery, producing better goods more efficiently. The neo-classical model of Solow was unable to explain this, treating it as exogenous. ( Sérgio Rebelo, “Why Do Growth Rates Differ?”)
Thus the endogenous theory came in to shine light on the matter. It originated from the studies of Paul Romer, who sought to understand the circumstances which could result in the economy displaying sustainable growth, despite the lack of any exogenous increase in productivity. ( Sérgio Rebelo, “Why Do Growth Rates Differ?”) The theory itself addresses the issue of private investment in R&D, being the main source of technological progress. The private firms will only invest in R&D if there are