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Is the Rate of ‘Convergence’ Always Constant? Some Empirical Evidence from Sector Level Data of 56 countries, 1975-99

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  • Mukherjee, D.

Abstract

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.

Suggested Citation

  • Mukherjee, D., 2006. "Is the Rate of ‘Convergence’ Always Constant? Some Empirical Evidence from Sector Level Data of 56 countries, 1975-99," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 6(2).
    • Handle: RePEc:eaa:eerese:v:6:y2006:i:6_9
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    More about this item

    Keywords

    semiparametric econometrics; sector-wise convergence;

    JEL classification:

    • C0 - Mathematical and Quantitative Methods - - General
    • E0 - Macroeconomics and Monetary Economics - - General
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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