Are Poor Countries Coming Closer To The Rich

Research Foundation of State University of New York
Are Poor Countries Coming Closer to the Rich?

Author(s): Prabirjit Sarkar
Source: Review (Fernand Braudel Center), Vol. 22, No. 4 (1999), pp. 387-406
Published by: Research Foundation of State University of New York for and on behalf of
the Fernand Braudel Center
Stable URL: https://www.jstor.org/stable/40241467
Accessed: 17-01-2020 22:04 UTC
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide
range of content in a trusted digital archive. We use information technology and tools to increase productivity and
facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at
https://about.jstor.org/terms
Fernand Braudel Center, Research Foundation of State University of New York are
collaborating with JSTOR to digitize, preserve and extend access to Review (Fernand Braudel
Center)
This content downloaded from 148.209.76.1 on Fri, 17 Jan 2020 22:04:41 UTC
All use subject to https://about.jstor.org/terms
Are Poor Countries Coming Closer
to the Rich?
Prabirjit Sarkar
i
Neoclassical Growth Theory and Its Convergence Implication
A re poor countries growing faster than rich countries and coming

jCJLcloser to them? Recently this has been a much-debated question
in the so-called mainstream economics. This spurt of debate owes
much to the so-called "new" growth theory propogated by Romer
(1986, 1990), Lucas (1988), Rebelo (1991), and many others. The
new growth theory came as a challenge to the old, neoclassical
growth theory pioneered by Solow (1956) and Swan (1956). Bringing
in the role of human capital formation in growth, technical progress
was endogenized and the law of diminishing returns to reproductive
capital- the important cornerstone of the neoclassical growth the-
ory-was questioned. A divergent growth pattern was now expected
in contrast to the convergence implication of the neoclassical model.
In the neoclassical model, poor countries with low ratios of capi-
tal to labor, have high marginal products of capital and high rates of
return to capital; hence they tend to grow at high rates. "This ten-
dency for low-income countries to grow at high rates is reinforced in
extensions of the neoclassical models that allow for international
mobility of capital and technology" (Barro, 1991: 407).
The New Growth Theory and its Divergence Implication
The new growth theory assumes constant returns to a broad

concept of reproducible capital which includes human capital; hence
the growth rate of per capita product is independent of the starting
level of per capita product. Romer (1990) took human capital as the
review, xxii, 4, 1999, 387-406 387
388 Prabirjit Sarkar
key input to the rese

ideas. So countries with
rience a more rapid ra
grow faster. Thus the
neoclassical growth th
Convergence Debate in H
Both the convergenc

very old, older than th
idea of convergence can
"specie-flow price me
Josiah Tucker (Tucker,
growth theory (Semme
ings, on the other han
gence can be found (E
In the early twentieth
trial development of
advantages of relative
and extended the work of Veblen to include Russia, France, and
Italy. The essence of the Veblen-Gershenkron "catching up" hypoth-
esis is that the latecomers in industrialization tend to grow faster
because learning and imitation is typically cheaper and faster than is
the original discovery and testing (see also Nelson & Phelps, 1966;
Gomulka, 1987).
Parallel to the convergence and catching up idea, the doctrine of
uneven development became the core of the writings of the radicals
such as Baran (1957), Frank (1967), and the Latin American struct-
uralist/dependency school.1 This idea can be traced in the writings
of less radical thinkers such as Prebisch (1950), Singer (1950), Myr-
dal (1957), and Lewis (1977).
Kaldor (1972, 1985) tried to explain the phenomenon of uneven
development through cumulative causation of an initial productivity
lead based on the existence of dynamic scale economies. Krugman
(1981) formalized a similar idea in a Heckscher-Ohlin framework
and showed that the country with a small head start in an industry
1 For collection of some papers written in this Latin American tradition, see Seers
(1981).
ARE POOR COUNTRIES COMING CLOSER TO THE RICH? 389
will go on increasing its productivity advantag

countries due to the existence of external econo
trade it will compete out the lagging countries fro
Statistical Debate in the 19 80' s
In the 1980's, a fully fledged statistical debate

publication of historical time series of sixteen in
tries from 1870 to 1979 (Maddison, 1982). This
observe: "These data enable us to observe the ca
quantitative terms over a much longer span of tim
hitherto" (1986: 386).
Baumol (1986) used these data and found throu
analysis a strong evidence of convergence among
trialized countries: a country with a lower GDP
experienced a higher rate of growth of GDP per w
riod of 110 years, 1870-1979. The finding of B
challenged by De Long. He observed:
Baumol's regression uses an ex post sample of
are now rich and have successfully developed.
choice, those nations that have not converge
from his sampte because of their resulting presen
erty. Convergence is thus all but guaranteed
sion run on an ex ante sample, a sample not o

have converged but of nations that seemed in
converge, can tell us whether growth sinc
"convergence." The answer to this ex ante quest
nations that a century ago technology converge
1138-39).
Baumol (Baumol & Wolff, 1988) accepted the val
cism and using Summers-Heston (1984) series f
dence of convergence only in the upper-income
dence of divergence among the lower-income coun
has already been noted by others and later on c
others (see Sheehey, 1996). An explanation of t
found in Abramovitz (1986); he argues that the
the "advantages of relative backwardness" depends
capabilities" that vary positively with income (for
see Azariadis et al., 1990; Becker et al., 1990).
"Conditional Convergen
Does this rejection of

against the neoclassical
Swan (1956) and suppo
1990), Lucas (1988), and
have added this dime
country studies of Bar
Martin (1992, 1995), a
absolute convergence; r
vergence-the countries
rates of population, etc
and standard of living.
sical growth theory as
theory predicts conditi
in all respects except fo
pected to converge to t
However, using alterna
tioned this finding of
pattern of cross-countr
and its divergence imp
Thus the debate has been turned into one of academic interest.
It is no longer concerned with the more fundamental issue- whether

a typical poor country can catch up with a rich country in the pro-
cess of growth and development. Nor is it concerned with whether
the global income inequality has a tendency to decline in the process
of evolution of the world-economy. It is basically concerned with
whether Solow was right or wrong.
A Critique of the Concept of Conditional Convergence
There is a gross fallacy in the concept of conditional conver-

gence. Poverty and saving-investment rate, for example, are related
to each other in mutual causation- known as "vicious circle of pover-
ty" in the early development economics literature: a poor country is
likely to have a low saving-investment rate because of its poverty, and
again because of its low saving-investment rate, its productivity is low
and so it has low per capita income.
Population growth and poverty are also related. The well-known
theory of demographic transition can be mentioned here. In the
ARE POOR COUNTRIES COMING CLOSER TO THE RICH? 39 1
post Second World War period, the poor countrie

the first phase of high birth and death rates an
growth, and reached the second phase of high p
due to high birth rate and low death rate. The rich
eral are in the third phase of low population growt
and death rates. Available data (UNCTAD, 1994:
during 1970-91, the rich ("developed market eco
called the "North") experienced an annual av
growth rate of 0.8% while the poor ("developing
hereafter called the "South")2 experienced a popu
of 2.4% per annum- the rate is about 3% for
Africa. School enrollment rates (emphasized in
dependency ratio (emphasized in Sheehey, 1996) a
connected to poverty in mutual causation.
Technological backwardness is another charact
country. A substantial technological gap exists betw
the rich. Even for the club of the rich, OECD,
(1996) found little evidence of convergence of m
nologies over time.
The conditional convergence hypothesis is, ther
cal: the standard of living of a poor country will e
with that of a rich country if it possesses the basic
the rich country- the same advanced level of tec
edge, the same high saving-investment rate, the
population growth due to mass literacy (particu
women), etc. It sounds ridiculous if one argues that
say, Ethiopia (with a per capita GDP of $49 in 19
per capita GDP of $38 in 1960) would catch up w
dard of living of the United States (with a per c
in 1960) within 35 years (under the 2% condition
tained by Barro and Sala-i-Martin, 1992 and 1995 an
if Ethiopia or Mali had the same saying-investment
United States, the same level of technological k
same rate of population growth, etc.
2 In U.N. compilation of data, the market economy world exclu

tries (former Soviet bloc countries and China). It is divided into t
veloped" and "developing." The developed covers all the market
Europe, the United States, Canada, Japan, Israel, Australia, New Z
ca. The rest of the market economy countries constitute the de
The whole debate on whether there exists conditional conver-

gence is sterile. What is important from the point of view of political
economy in general and development economics in particular is
whether the present world scenario is one of absolute convergence.
This is the issue which once bothered David Hume and Josiah
Tucker and later on bothered the scholars in the Marxist tradition
such as Paul Baran and Andre Gunder Frank, the whole Latin Amer-
ican structuralist/dependency school, and all sensible scholars in
development economics.
Therefore, the present article is concerned with absolute conver-
gence. It assembles some data from available sources and examines
the question of convergence. In Section II, the data source, method-
ology, and the findings are presented. Summary and conclusions are
given in Section III.
II
Casual Evidence of Divergence
There is some casual evidence in favor of divergence (United

Nations, 1976: 700-02 and UNCTAD, 1995: 337-41). The per capita
GDP of the North in 1960 was $1500 and by 1993, it became
$21,875. During the same period, the per capita GDP of the South
rose from $130 to $984; that of Africa rose from $130 to $536, that
of LAC rose from $320 to $2959, and that of Asia (excluding the
Middle East) rose from 110 to 654. In ratio terms, the per capita
GDP of the North was 1 1.5 times of that of the South in 1960 and it
became more than 22 times in 1993. In the case of Africa, the gap
became more acute- from 11.5 in 1960, the per capita GDP of the
North became about 41 times of that of Africa in 1993. For Asia
(excluding the Middle East), the corresponding figures are about 14
and 33 while for LAC, these are about 5 and 7. These figures also
point out the growing gap between different regions of the South.
The more rigorous study is undertaken below.
The Present Study: Data Source and Methodology
Recent studies on the issue of convergence are mainly based on

various versions of the Penn World Table (Summers-Heston, 1991).
These series use "international prices" to adjust f

the purchasing power of currencies. More recent
pointed out that these data have some downward
growth rates of poor countries and upward bias in
rates of rich countries. Hence the series may fav
hypothesis. It was observed:
International prices are useful for adjusting GDP
differences in price level; they are certainly prefe
exchange rates. However, using domestic price
growth rates is more reliable, because those price
the trade-offs faced by the decision making agen
they have a better foundation in the economic th
numbers (Nuxoll, 1994: 1434).
Our study is based on national accounts stat
collected from different U.N. publications. From
1995), annual growth rates of real GDP per capita
a sample of 110 countries over the period, 1960-
number of subperiods,3 1960-70, 1970-75, 19
1985-90, 1990-91, 1991-92, and 1992-93. The grow
culated by using data for all the years of each subp
beginning and end year data) by fitting an expon
tion. From United Nations (1976), the 1960 figu
capita (in U.S. dollars) are collected for all these c
By and large our sample selection is determin
availability of data.5 The sample consists of 24 coun
and 86 countries of the South (42 countries from
tries from Asia, 24 countries from Latin Ameri
LAC, and 2 countries from Oceanea).
The growth rates of real GDP per capita for ea
different subperiods are plotted against its 1960 GD
3 For some countries we do not have data for all the periods,
1992-93.
4 For some poor countries 1960-GDP figures are not available. So we have used
1963 figures for some countries and 1970 figures for some countries. We do not expect
any substantial alteration of the basic results.
5 Major petroleum exporters such as Libya, Iran, Iraq, Kuwait, and Saudi Arabia are
deliberately excluded from the sample. Their real GDP per capita showed high negative
growth because of the OPEC strategy of output restrictions and price increase.
of dollar values) in a sc
shows some evidence
regression analysis.
Regression Analysis: Stro
As in Baumol (1986),
Yit=a + b.logXi60 (1)
where Y it is the annual rate of growth of real G
i-th country in the t-th period, X i60 is its GDP
and b are the intercept and slope parameters
estimated from the data collected here.
The equation (1) is fitted through the OLS (Ordinary Least
Squares) procedure to the whole sample (110 countries and 867
observations). Table 1 reports the estimates. The estimates of the
regression coefficient (slope), b and its t-ratio given in parentheses
show a positive relationship (of very high statistical significance) be-
tween the initial GDP per capita and its subsequent growth rate in
real terms. This implies that poor countries with lower per capita
GDP in 1960 experienced a lower real rate of growth in the GDP per
capita than the countries with higher GDP per capita. That means
the gap between the per capita GDP levels of poor and rich coun-
tries widened during the period of our study.
However, there exists a strong evidence of the problem of heter-
oscedasticity and so t-ratios are reestimated through the procedure
of White (1980).6 These are also reported in table 1. This process of
tackling the problem of heteroscedasticity does not alter the conclu-
sion.
The question is whether the same divergent relationship can be

found for the two subgroups, the North and the South. Two sepa-
rate scatter diagrams are drawn for the two sub-groups (figures 2
and 3). The scatter of points for the North shows some evidence of
convergence (figure 2) and that for the South shows the opposite
(figure 3).
6 Under condition of heteroscedasticity, one cannot say with certainty whether the
OLS estimated standard errors are too low or too high. White's estimate is robust to
most types of heteroscedasticity (1980).
Table 1
Per Capita Gross Domestic Product, 1960 and
Its Real Rate of Growth, 1960-93: Pooled Regression Results
-: Estimates* :-
Sample groups a, b, R Bar Square F D-W

Intercept slope
(t-ratios)
1. WHOLE SAMPLE (110 countries, 867 observations)5

-1.96 0.58 0.03 23.52 1.43
(-2.94) (4.85)
[-2.99] [5.32]
2. NORTH (24 countries, 192 observations)
5.65 -0.55 0.02 4.21 1.3
(3.02) (-2.05)
[2.73] [-1.89]
3. SOUTH (86 countries, 675 observations)
-4.28 1.06 0.03 24.62 1.45
(-3.95) (4.96)
[-3.80] [4.85]
4. AFRICA (42 countries, 326 observations)
-4.72 1.02 0.02 6.88 1.64
(-2.55) (2.62)
5. ASIA (18 countries, 142 observations)
-6.11 1.84 0.11 19.12 1.50
(-2.90) (4.37)
6. LATIN AMERICA & CARIBBEAN (24 countries, 191 observations)
-4.63 1.00 0.02 5.36 1.53
(-1.88) (2.32)
7. POOR with 1960-GDP per capita < 500 (86 countries, 677 observat
-5.28 1.27 0.04 30.32 1.46
(-4.54) (5.51)
[-4.34] [5.37]
8. RICH with 1960-GDP per capita > 500 (24 countries, 190 observation
5.63 -0.55 0.004 1.71 1.49
(1.89) (-1.31)
[1.77] [-1.25]
9. Divergent Group with 1960-GDP per capita < 1300 (99 countri
observations)
3.38 0.87 0.04 29.77 1.44
(-3.98) (5.46)
[-3.98] [5.67]
-: Estimates51 :
Sample groups a, b, R Bar Square F D-W

Intercept slope
(t-ratios)
10. Convergent Group with 1960-GDP per capita > 1300 (11 countries, 88
observations)
0.23 0.17 -0.01 0.04 1.47
(0.03) (0.18)
[0.04] [0.22]
a A simple semi-log linear relationship is fitted:
Yit= a + b.logXigo
where Y it is the annual rate of growth of real GDP per capita for the i-
t-th period, X i60 is its GDP per capita in 1960, and a & b are the in
parameters (respectively).
The equation is fitted through the OLS procedure. Chi-Square and F-
scedasticity are conducted on the basis of regression of squared resi
fitted values. If the problem of heteroscedasticity is found, the t-ratios
the basis of White's covariance matrix (1980). These t-ratios are given in
b The whole sample covers 110 countries.

South ("Developing Market Economy"- 86 countries):
Algeria, Angola, Egypt, Morocco, Sudan, Tunisia, Benin, Botswana

Cameroon, Central African Republic, Chad, Comoros, Congo, Ivo
Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya,
Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Nig
Reunion, Rwanda, Senegal, Sierra Leone, Somalia, Swaziland, Tog
Tanzania, Zaire, Zambia (42 countries from Africa); Argentina, Bol
Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Surinam, Urug
zuela, Barbados, Costa Rica, Dominican Republic, El Salvador, Hai
ras, Jamaica, Mexico, Nicaragua, Panama, Trinidad 8c Tobago, Ve
countries from the Latin America and Caribbean [LAC]); Cyprus, Jor
Turkey, Afghanistan, Bangladesh, Hong Kong, India, Indonesia, So
Malaysia, Myanmar, Nepal, Pakistan, Phillipines, Singapore, Sri La
land (18 countries from Asia); Fiji and Papua New Guinea (2 coun
Oceania).
North ("Developed Market Economy"- 24 countries):
Canada, the United States, Austria, Belgium, Denmark, Finland, F

many, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherland
Portugal, Spain, Sweden, Switzerland, the United Kingdom, Australia
land, South Africa, and Japan.
.22
«» s
- o
•5 - ^
£ C
2 j
W Ô OO
Si
CJ r-l
Si
Is.
!ï
Ig
■S?
8 5.
o-g
£ O «o
gf
| u
a; v
PQ Oh
OhPh
|g
1
U O
î
"2 'G
d Oh
ci U
çq a*
|o
o 13
JS ^
Pi o
To examine whether
is different for the No
and slope dummies. Ass
of the North and the S
a,, and bn for the Nor
Yit=as + bs.logXi60 (2)

Yit= an + b^logXtfo (3)
Equations (2) and (3) can be combined into a multip
with the aid of dummies:
Y it = as + bs .log X i60 + ans .DNit + bns .SDNit (4)

where DNit is the intercept dummy = 1 for the 24 countries of the
North and = 0 for other countries, SDNit is the slope dummy = DNit
.X i60 = X i60 for the North and = 0 for other countries, a^ = a^ and
bns = bn-bs.
Equation (4) is fitted to the whole sample. The estimated equa-
tion is:
Y it = -4.28 + 1.06 log X i60 + 9.9 Dnit - 1.61 SDNit (5)

(-3.80) (4.85) (4.21) (4.42)
where R bar square = 0.04, F = 12.43 and Durbin-W
(DW) = 1.45 (White's estimate of t-ratios is in parenthe
the problem of heteroscedasticity).
The estimates given in equation (5) show that the
ences a strong evidence of divergence (the estimate o
and statistically significant); the relationship is structu
for the North (both dummies are statistically significa
of the the coefficients of the dummies indicate that a,,
and give the clue that the Southern experience of d
not be shared by the Northern countries. The observat
tically significant higher level of intercept ( 2^ > as) can
indication that the growth rate of the Northern countr
are higher than those of the Southern countries.
In view of the findings of the dummy variable analy
(1) is fitted separately to the two subsamples, the N
tries, 192 observations) and the South (86 countries
tions). The estimates are again reported in table 1 (p
For the North, there is some evidence of converge
parameter is negative and significant at 5% lev

strong evidence of the problem of heteroscedast
mate of the t-ratio of the slope parameter sho
gence is not robust- the slope is not significant
it can be concluded that the existing gap among
North did not widen. The relatively poor countr
as Greece, Portugal, and Spain did not come c
countries such as the United States and Canada.
For the South, on the other hand, a strong evidence of divergence
has been found (thereby confirming the findings of the dummy vari-
able analysis). To examine whether the different regions of the South
face the same divergent relationship, the dummy variable analysis is
conducted for the South subsample. The fitted regression is
Y it = a,1 + bsMog X i60 + aas .DA* + b^ .SDA* + als .DLit + bls .SDNit
(6)
where DAit(DLit ) is the intercept dummy = 1 for 42 (24) countries of

Africa (Latin America including the Caribbean, LAC) and = 0 for
other countries, SDA* (SDLit) is the slope dummy = X^ for Africa
(LAC) and = 0 for other countries; as! and bs' are the intercept and
slope parameters for the South (less Africa and LAC); aj bj alsand
bls are the coefficients of the dummies used.
Fitting equation (6) to the South subsample, the following esti-
mates are obtained:
Y it = -4.64 + 1.53 log X i60 - 0.08 DAu -0.51 SDA^ 0.01 Dl^ -0.53 SDLit
(-1.90) (3.16) (-0.03) (-0.85) (0.004) (-0.77)
(7)
where R bar sq. = 0.10, F = 16.81 and DW = 1.56 (t-ratios in paren-

theses).
The estimates given in equation (7) indicate that the strong evi-
dence of divergence experienced by (the 18 countries of) Asia and
(the 2 countries of) Oceanea combined together is shared by (the 42
countries of) Africa and (the 24 countries of) LAC without any
significant difference in structural parameters (slope and intercept).
The CUSUM Squares test, based on the OLS residuals of equation
(1) fitted to the South, confirms the findings of the dummy variable
analysis.
Fitting equation (1) to the different regions of the South such as
Africa, Asia, and LAC, a strong evidence of divergence has been
found in each case (see

evidence of instabilit
Squares tests findings).
are homogeneous in r
What has been observ
can also be observed m
two groups on the bas
GDP per capita less th
GDP per capita greate
groups, a strong evid
"poor" while an insig
observed in the case o
Reversal of Divergence at
From the foregoing a

the divergence hypoth
countries (the South i
hold for the high incom
countries). Is there an
which the divergent h
answer this question c
the whole sample:
Yit=c + d.Xi60 + e(Xi60)2 (8)
where c, d and e are parameters to be estimated.
The estimates (with due care to the problem of heterosce
ity) confirm the slowing down of the force of divergence wit
rise in the initial GDP per capita across the countries (note th
tivity of the estimate of e):
Y it = 0.57 + 0.0026 X i60 - (0.10/105) (X^)2 (9)

(2.67) (4.76) (-4.25)
where R bar square = 0.02, F = 8.21 and D-W = 1.42 (Whit
of t-ratios are in parentheses).
Equation (9) shows that the higher the initial GDP per cap
higher is the growth rate of real GDP per capita; but there
of GDP per capita at which the rate of growth is maxim
which the convergence hypothesis holds good- the higher
per capita the lower is the rate of growth. The value of the
capita at which the rate of growth is maximum is gi

ting the estimates of d and e from equation (9), t
at which the rate of growth is maximum is $1300.
On the basis of this threshold level of income,
made: divergent group with the initial GDP per
$1300 and the convergent group with the initia
above $1300. Altogether 99 countries belong to th
and 1 1 countries belong to the convergent group.7
Fitting Equation (1) to each group, it is observed t
group experiences a strong evidence of divergence b
group experiences neither convergence nor diverg
significance (see table 1, panels 9 and 10). This show
eleven countries who were already rich in 1960, the
of real income (per capita) has no relationship with
income. Excluding these top eleven countries, the ot
pattern in accordance with the divergence hypothesi
This conclusion can be contrasted with that of Baumol and Wolff
(1988) and Sheehey (1996). Their studies observed convergence for
the top 17/14 countries (respectively) and divergence for the rest.
Their source of data, sample coverage, and period of study are dif-
ferent. Moreover, as Baumol and Wolff admitted, they compare only
1950 and 1980, with no attention to intermediate year figures, (Shee-
hey [1996] did not mention the process of his growth rate calcula-
tion). Perhaps the more important point is that the problem of
heteroscedasticity was not given due attention. Our result is also in
keen contrast to the formation of convergence clubs of rich and
poor, expected in Quah (1996) and in some theoretical growth mod-
els (see Galor, 1996).
Ill
Conclusion
The growth pattern during the last three decades did not show
any sign of convergence. A typically poor country in the early 1960's
7 The top eleven countries on the basis of 1960-GDP per capita are: the United
States, Canada, France, Germany, Luxembourg, Iceland, Sweden, Switzerland, the United
Kingdom, Australia, and New Zealand.
did not experience a hi

up of the standard of l
tries. This is true for t
of the South (Africa,
a whole. There is a stro
vergent-instead of any
between the poor and
ond World War period
tion-the force of diver
capita) across the coun
countries which exper
any convergence).
REFERENCES
Abramovitz, Moses (1986). "Catching Up, Forging Ahead, and Falling Behind," Journal of Econom
History, LXVI, 2, June, 385-406.
Azariadis, Costas & Drazen, Allan (1990). "Threshold Externalities in Economic Developme
Quarterly Journal of Economics, CV, 2, May, 501-26.
Bagchi, Amiya Kumar (1992). "On the Political Economy of the Choice of a Trade Regim
Occasional Paper, No. 131, Centre for Studies in Social Sciences, Calcutta.
Baran, Paul (1957). The Political Economy of Growth. New York: Monthly Review Press.
Barro, Robert J. (1991). "Economic Growth in a Cross-section of Countries," Quarterly Journ
Economics, CVI, 2, May, 407-43.
Barro, Robert J. 8c Sala-i-Martin, Xavier (1992). "Convergence," Journal of Political Economy, C
Apr., 223-51.
Barro, Robert J. 8c Sala-i-Martin, Xavier (1995). Economic Growth. New York: McGraw-Hill.
Baumol, William J. (1986). "Productivity Growth, Convergence, and Welfare: What the Long-Run
Data Show," American Economic Review, LXXVI, 5, Dec, 1072-116.
Baumol, William J. 8c Wolff, Edward N. (1988). "Productivity Growth, Convergence, and Welfare:
Reply," American Economic Review, LXXVIII, 5, Dec, 1155-59.
Becker, Gary; Murphy, Kevin 8c Tamura, Robert (1990). "Human Capital, Fertility, and Economic
Growth," Journal of Political Economy, XCVIII, 5, part 2, Oct., S12-S37.
Bernard, A. B. & Jones, C. I. (1996). "Technology and Convergence," Economic Journal, CVI, 437,
July, 1037-44.
De Long, Bradford J. (1988). "Productivity Growth, Convergence, and Welfare: Comment,
American Economic Review, LXXVIII, 5, Dec, 1138-54.
Durlauf, Steven N. (1996). "On the Convergence and Divergence of Growth Rates: An Introduc-
tion," Economic Journal, CVI, 437, July, 1016-18.
Elmslie, Bruce 8c Milberg, William (1996). "The Productivity Convergence Debate: A Theoretical
and Methodological Reconsideration," Cambridge Journal of Economics, XX, 153-82.
Frank, Andre Gunder ( 1 967). Capitalism and Underdevelopment in Latin America. New York: Monthly
Review Press.
Galor, Oded (1996). "Convergence? Inferences from Theoretical Models," The Economic Journal,
CVI, 437, July, 1056-69.
Gershenkron, A. (1952). "Economic Backwardness in Historical Perspective," in B. Hoselitz, éd.,
The Progress of Underdeveloped Areas. Chicago: Univ. of Chicago Press, 3-29.
Gomulka, Stanislaw (1987). "Catching-Up," New Palgrave Dictionary of

lan.
Hume, David (1752). Essays, Moral, Political and Literary. Vol. I, Lon
Kaldor, Nicholas (1972). "The Irrelevance of Equilibrium Econ
CDLXXXII, 4, Dec, 1237-55.
Kaldor, Nicholas (1985). Economics Without Equilibrium. New York: M. E. Sharpe.
Krugman, Paul (1981). "Trade, Accumulation, and Uneven Development, "Journal of Development
Economics, VIII, 2, Apr., 149-62.
Lewis, Arthur (1977). The Evolution of the International Economic Order. Princeton: Princeton Univ.
Press.
Lucas, Robert E., Jr. (1988). "On the Mechanics of Economic Development, "Journal of Monetary
Economics, XXII, 1, July, 3-42.
Maddison, Angus (1982). Phases of Capitalist Development. New York: Oxford Univ. Press.
Mankiw, N. Gregory; Romer, David & Weil, David N. (1992). "A Contribution to the Empirics of
Economic Growth," Quarterly Journal of Economics, CVII, 2, May, 407-37.
Myrdal, Gunnar (1957). Economic Theory and Underdeveloped Regions. London: Duckworth.
Nelson, Richard R. 8c Phelps, Edmund S. (1966). "Investment in Humans, Technological Diffusion,
and Economic Growth," American Economic Review, LVI, 2, May, 69-75.
Nuxoll, Daniel A. (1994). "Differences in Relative Prices and International Differences in Growth
Rates," American Economic Review, LXXXTV, 5, Dec, 1423-36.
Prebisch, Raul (1950). The Economic Development of Latin America and Its Principal Problems. New
York: United Nations.
Quah, Danny T. (1996). "Twin Peaks: Growth and Convergence in Models of Distribution
Dynamics," Economic Journal, CVI, 437, July, 1045-55.
Rebelo, Sergio (1991). "Long-Run Policy Analysis and Long-Run Growth," Journal of Political
Economy, XCDC, 3, June, 500-21.
Romer, Paul M. (1986). "Increasing Returns and Longrun Growth," Journal of Political Economy,
XCIV, 5, Oct., 1002-37.
Romer, Paul M. (1990). "Endogenous Technological Change," Journal of Political Economy, XCVIII,
5, pt. 2, Oct., S71-102.
Sala-i-Martin, Xavier X. (1996). "The Classical Approach to Convergence Analysis," Economic
Journal, CVI, 437, July, 1019-36.
Seers, Dudley (1981). Dependency Theory: A Critical Reassessment London: Frances Printers.
Semmel, Bernard (1970). The Rise of Free Trade Imperialism: Classical Political Economy, The Empire
of Free Trade and Imperialism. Cambridge: Cambridge Univ. Press.
Sheehey, Edmund J. (1996). "The Growing Gap Between Rich and Poor Countries: A Proposed
Explanation," World Development, XXIV, 8, 1379-84.
Singer, Hans W. (1950). "The Distribution of Gains Between Investing and Borrowing Countries,"
American Economic Review, XL, 3, May, 473-85.
Solow, Robert M. (1956). "A Contribution to the Theory of Economic Growth," Quarterly Journal
of Economics, LXX, 1, Feb., 65-94.
Summers, Robert & Heston, Alan (1984). "Improved International Comparisons of Real Product
and its Composition, 1950-1980," Review of Income and Wealth, No. 30, June, 207-62.
Summers, Robert & Heston, Alan (1991). "The Penn World Table (mark 5): An Expanded bet ot
International Comparisons, 1950-1988," The Quarterly Journal of Economics, CVI, 2, May, 327-
68.
Swan, Trevor W. (1956). "Economic Growth and Capital Accumulation," Economic Record, XXXII,
59, Dec, 334-61.
Tucker, Josiah (1774). Four Tracts Together with Two Sermons on Political and Commercial Subject.
Gloucester.
UNCTAD (1994). Handbook of International Trade and Development Statistics, 1993. Geneva: United
Nations.
UNCTAD (1995). Handbook of International Trade and Development Statistics, 1994. Geneva: United
Nations.
United Nations (1976). Statistica

Veblen, Thorstein (1915). Imperia
White, Halbert (1980). "A Hetero
Test for Heteroskedasticity," E

Are Poor Countries Coming Closer To The Rich

Caricato da

Informazioni sul documento

Titolo originale

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Are Poor Countries Coming Closer To The Rich

Caricato da

Copyright:

Formati disponibili

Research Foundation of State University of New York

Are Poor Countries Coming Closer to the Rich?

Neoclassical Growth Theory and Its Convergence Implication

A re poor countries growing faster than rich countries and coming

The New Growth Theory and its Divergence Implication

The new growth theory assumes constant returns to a broad

review, xxii, 4, 1999, 387-406 387

key input to the rese

Both the convergenc

will go on increasing its productivity advantag

Statistical Debate in the 19 80' s

In the 1980's, a fully fledged statistical debate

sion run on an ex ante sample, a sample not o

Does this rejection of

It is no longer concerned with the more fundamental issue- whether

A Critique of the Concept of Conditional Convergence

There is a gross fallacy in the concept of conditional conver-

post Second World War period, the poor countrie

2 In U.N. compilation of data, the market economy world exclu

The whole debate on whether there exists conditional conver-

Casual Evidence of Divergence

There is some casual evidence in favor of divergence (United

The Present Study: Data Source and Methodology

Recent studies on the issue of convergence are mainly based on

These series use "international prices" to adjust f

Regression Analysis: Stro

The question is whether the same divergent relationship can be

Sample groups a, b, R Bar Square F D-W

1. WHOLE SAMPLE (110 countries, 867 observations)5

Sample groups a, b, R Bar Square F D-W

a A simple semi-log linear relationship is fitted:

b The whole sample covers 110 countries.

Algeria, Angola, Egypt, Morocco, Sudan, Tunisia, Benin, Botswana

North ("Developed Market Economy"- 24 countries):

Canada, the United States, Austria, Belgium, Denmark, Finland, F

Yit=as + bs.logXi60 (2)

Y it = as + bs .log X i60 + ans .DNit + bns .SDNit (4)

Y it = -4.28 + 1.06 log X i60 + 9.9 Dnit - 1.61 SDNit (5)

parameter is negative and significant at 5% lev

where DAit(DLit ) is the intercept dummy = 1 for 42 (24) countries of

where R bar sq. = 0.10, F = 16.81 and DW = 1.56 (t-ratios in paren-

found in each case (see

From the foregoing a

Y it = 0.57 + 0.0026 X i60 - (0.10/105) (X^)2 (9)

capita at which the rate of growth is maximum is gi

did not experience a hi

Gomulka, Stanislaw (1987). "Catching-Up," New Palgrave Dictionary of

United Nations (1976). Statistica

Potrebbero piacerti anche