Absolute and conditional convergence are concepts in economic growth theory that describe how economies grow relative to each other over time.

Absolute Convergence: This hypothesis posits that poorer economies will grow faster than richer ones, eventually converging in terms of per capita income levels. The idea is that poorer countries have more room to grow and can adopt existing technologies from richer countries, allowing them to catch up. If absolute convergence holds, all countries, regardless of their initial conditions, will eventually reach similar levels of per capita income and output. This model assumes that all economies have access to the same technology, capital, and have similar rates of savings and population growth.

Conditional Convergence: Conditional convergence, on the other hand, suggests that economies converge to their own steady-state levels of income, which depend on specific characteristics such as savings rates, population growth, and institutional factors. Under this hypothesis, poorer countries will grow faster only if they share similar structural characteristics with richer countries. Thus, conditional convergence allows for differences in technology, preferences, and economic policies. Countries converge not to a common income level, but to their unique long-term economic position defined by their own fundamentals.

While absolute convergence assumes all economies will eventually become alike in terms of income per capita, conditional convergence acknowledges that economies will only converge if they have similar structural characteristics and policies.