Convergence: International comparisons based on a simultaneous equation model with regional effects
- 1 July 2000
- journal article
- research article
- Published by Informa UK Limited in International Review of Applied Economics
- Vol. 14 (3), 285-305
- https://doi.org/10.1080/02692170050084042
Abstract
A structural model incorporating regional effects is fitted to cross-sectional data for 60 countries. The model integrates various strands in the literature, including the dynamic Verdoorn Law linking productivity growth to output growth, and relationships between educational attainment, trade and innovativeness. Most notably, the structural model supports the thesis that a country's innovativeness and, consequently, capital stock growth, depend on the level of technology in the 'surrounding' region.The approach adopted is set within the context of the theoretical and empirical analysis of increasing returns and cumulative causation. However, the resulting parameter estimates lead to a reduced form that implies convergence to an equilibrium rather than divergent productivity levels. The equilibrium productivity level ratios (vis-à-vis the USA) indicate that countries are converging on different levels, although a group does attain the USA productivity level.Keywords
This publication has 1 reference indexed in Scilit:
- Catch-up and convergence: a model of cumulative growthInternational Review of Applied Economics, 1993