This paper deals with the issue of sector level convergence of gross domestic product for a combined set of developed and underdeveloped countries. A priori it is not assumed that the rate of convergence is constant. Instead, using a flexible functional form, it is found that the rate of convergence indeed varies with the level of income. The results indicate that for all the sectors considered, the rate of convergence falls as the level of GDP rises and it becomes zero after some threshold level of production being achieved. This clearly supports the fact that the effect of diminishing returns becomes stronger with an increase in the level of GDP. This also supports the hypothesis of multiple regime equilibria. Evidence of convergence is much lower in the agricultural sector than in the industrial and services sectors.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Find related papers by JEL classification: C0 - Mathematical and Quantitative Methods - - General E0 - Macroeconomics and Monetary Economics - - General O1 - Economic Development, Technological Change, and Growth - - Economic Development
Did you know? All full texts are decentralized with the publishers, none reside on this server, thus making it possible to offer this service for free to all parties.