Twin-Peaks - What the Knowledge-Based Approach Can Say about the Dynamics of the World Income Distribution
AbstractOne of the most recently observed stylised facts in the field of economic growth is the persistent bimodal shape of the world income distribution.. Of course, some theoretical explanations for this new stylised fact already have been provided by neoclassical growth theory within a maximising framework. Although innovation and technology are recognised as being the driving forces behind growth processes, these models maintain the restrictive assumption of a rational acting representative agent. In this paper we draw on a synergetic approach of evolutionary economics. In the model, the countries' productivity development is depicted as a sequence of relative technological levels and the movement from one level to the next higher one is governed by stochastic transition rates. The motivation for these transition rates is based on the knowledge-based approach of evolutionary economics, thereby taking into account depleting technological opportunities, the effects of technological infrastructure and permanent technological obsolescence due to an ubiquitous scientific progress. With this model we are able to show how a persistent bimodal distribution - the twin peaks - endogenously emerges via self-organisation. This simulated distribution matches well with the kernel density plot, calculated for GDP per worker data relative to the GDP per worker in the USA over the period 1960-90 for a sample of 104 countries. Both the empirical and theoretical results show an evolution of the density function toward bimodality with a decreasing number of countries with low relative productivity levels and an increasing number of countries with high relative productivity levels, indicating a prevalent catching-up during the period of investigation. However, the separation of both groups of countries is getting more significant over time and therefore further catching-up is expected to become increasingly difficult in the future.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. 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.
Bibliographic InfoPaper provided by Universitaet Augsburg, Institute for Economics in its series Discussion Paper Series with number 189.
Date of creation: Dec 1999
Date of revision:
Contact details of provider:
Postal: Universitaetsstrasse 16, D-86159 Augsburg, Germany
Phone: +49 821 598 4060
Fax: +49 821 598 4217
Web page: http://www.wiwi.uni-augsburg.de/vwl/institut
More information through EDIRC
Find related papers by JEL classification:
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May.
- Eliasson, Gunnar, 1990. "The firm as a competent team," Journal of Economic Behavior & Organization, Elsevier, vol. 13(3), pages 275-298, June.
- Steven N. Durlauf & Danny T. Quah, 1998.
"The New Empirics of Economic Growth,"
NBER Working Papers
6422, National Bureau of Economic Research, Inc.
- Durlauf,S.N. & Quah,D.T., 1998. "The new empirics of economic growth," Working papers 3, Wisconsin Madison - Social Systems.
- Steven N. Durlauf & Danny T. Quah, 1998. "The New Empirics of Economic Growth," Working Papers 98-01-012, Santa Fe Institute.
- S Durlauf & Danny Quah, 1998. "The New Empirics of Economic Growth," CEP Discussion Papers dp0384, Centre for Economic Performance, LSE.
- Freeman, Chris, 1994. "The Economics of Technical Change," Cambridge Journal of Economics, Oxford University Press, vol. 18(5), pages 463-514, October.
- Klevorick, Alvin K. & Levin, Richard C. & Nelson, Richard R. & Winter, Sidney G., 1995.
"On the sources and significance of interindustry differences in technological opportunities,"
Elsevier, vol. 24(2), pages 185-205, March.
- Alvin K. Klevorick & Richard C. Levin & Richard R. Nelson & Sidney G. Winter, 1993. "On the Sources and Significance of Interindustry Differences in Technological Opportunities," Cowles Foundation Discussion Papers 1052, Cowles Foundation for Research in Economics, Yale University.
- Dosi, Giovanni, 1993.
"Technological paradigms and technological trajectories : A suggested interpretation of the determinants and directions of technical change,"
Elsevier, vol. 22(2), pages 102-103, April.
- Dosi, Giovanni, 1982. "Technological paradigms and technological trajectories : A suggested interpretation of the determinants and directions of technical change," Research Policy, Elsevier, vol. 11(3), pages 147-162, June.
- Charles I. Jones, 1997.
"On the Evolution of the World Income Distribution,"
Journal of Economic Perspectives,
American Economic Association, vol. 11(3), pages 19-36, Summer.
- Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers dp0280, Centre for Economic Performance, LSE.
- Danny Quah, 1992.
"Empirical Cross-Section Dynamics in Economic Growth,"
FMG Discussion Papers
dp154, Financial Markets Group.
- Quah, Danny, 1993. "Empirical cross-section dynamics in economic growth," European Economic Review, Elsevier, vol. 37(2-3), pages 426-434, April.
- Danny Quah, 1992. "Empirical cross-section dynamics in economic growth," Discussion Paper / Institute for Empirical Macroeconomics 75, Federal Reserve Bank of Minneapolis.
- Dan Ben-David & David H. Papell, 1998.
"Slowdowns And Meltdowns: Postwar Growth Evidence From 74 Countries,"
The Review of Economics and Statistics,
MIT Press, vol. 80(4), pages 561-571, November.
- Ben-David, Dan & Papell, David, 1995. "Slowdowns and Meltdowns: Post-war Growth Evidence from 74 Countries," CEPR Discussion Papers 1111, C.E.P.R. Discussion Papers.
- Ben-David, D. & Papell, D.H., 1996. "Slowdowns and Meltdowns: Post-War Growth Evidence from 74 Countries," Papers 9-96, Tel Aviv.
- Dan Ben-David & David H. Papell, 1997. "Slowdowns and Meltdowns: Postwar Growth Evidence from 74 Countries," NBER Working Papers 6266, National Bureau of Economic Research, Inc.
- Alfred Greiner & Willi Semmler, 1996. "Multiple steady states, indeterminacy, and cycles in a basic model of endogenous growth," Journal of Economics, Springer, vol. 63(1), pages 79-99, February.
- Xavier Sala-i-Martin, 1995.
"The classical approach to convergence analysis,"
Economics Working Papers
117, Department of Economics and Business, Universitat Pompeu Fabra.
- Giovanni Dosi & Christopher Freeman & Richard Nelson & Gerarld Silverberg & Luc Soete (ed.), 1988. "Technical Change and Economic Theory," LEM Book Series, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy, number dosietal-1988, June.
- Paapaa, Richard & van Dijk, Herman K., 1998. "Distribution and mobility of wealth of nations," European Economic Review, Elsevier, vol. 42(7), pages 1269-1293, July.
- Justman, Moshe & Teubal, Morris, 1995. "Technological infrastructure policy (TIP): Creating capabilities and building markets," Research Policy, Elsevier, vol. 24(2), pages 259-281, March.
- Summers, Robert & Heston, Alan, 1991. "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950-1988," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 327-68, May.
- Quah, Danny, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," CEPR Discussion Papers 1586, C.E.P.R. Discussion Papers.
- Nelson, Richard R & Pack, Howard, 1999.
"The Asian Miracle and Modern Growth Theory,"
Royal Economic Society, vol. 109(457), pages 416-36, July.
- Lee, Bong-Soo & Ingram, Beth Fisher, 1991. "Simulation estimation of time-series models," Journal of Econometrics, Elsevier, vol. 47(2-3), pages 197-205, February.
- Romer, P.M., 1988. "Capital Accumulation In The Theory Of Long Run Growth," RCER Working Papers 123, University of Rochester - Center for Economic Research (RCER).
- Bianchi, Marco, 1997. "Testing for Convergence: Evidence from Non-parametric Multimodality Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(4), pages 393-409, July-Aug..
- Quah, Danny, 1993.
" Galton's Fallacy and Tests of the Convergence Hypothesis,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 95(4), pages 427-43, December.
- Quah, Danny, 1993. "Galton's Fallacy and Tests of the Convergence Hypothesis," CEPR Discussion Papers 820, C.E.P.R. Discussion Papers.
- Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-54, July.
- Quah, Danny T, 1996.
"Twin Peaks: Growth and Convergence in Models of Distribution Dynamics,"
Royal Economic Society, vol. 106(437), pages 1045-55, July.
- Quah, Danny, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEPR Discussion Papers 1355, C.E.P.R. Discussion Papers.
- David T. Coe & Elhanan Helpman & Alexander Hoffmaister, 1995.
"North-South R&D Spillovers,"
NBER Working Papers
5048, National Bureau of Economic Research, Inc.
- Jens Kaüger & Uwe Cantner & Horst Hanusch, 2000. "Total factor productivity, the east Asian miracle, and the world production frontier," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 136(1), pages 111-136, March.
- Eliasson, Gunnar, 1988. "The Firm as a Competent Team," Working Paper Series 207, Research Institute of Industrial Economics, revised Feb 1990.
- Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-96, September.
- Cantner, Uwe & Pyka, Andreas, 1998. "Technological evolution -- an analysis within the knowledge-based approach," Structural Change and Economic Dynamics, Elsevier, vol. 9(1), pages 85-107, March.
- Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-85, December.
- Sahal, Devendra, 1985. "Technological guideposts and innovation avenues," Research Policy, Elsevier, vol. 14(2), pages 61-82, April.
- Cantner, Uwe & Pyka, Andreas, 1998. "Absorbing Technological Spillovers: Simulations in an Evolutionary Framework," Industrial and Corporate Change, Oxford University Press, vol. 7(2), pages 369-97, June.
- Kurt Dopfer, 2012. "The origins of meso economics," Journal of Evolutionary Economics, Springer, vol. 22(1), pages 133-160, January.
- Uwe Cantner & Horst Hanusch, 2000. "Heterogeneity and Evolutionary Change - Empirical Conception, Findings and Unresolved Issues," Discussion Paper Series 190, Universitaet Augsburg, Institute for Economics.
- Uwe Cantner & Bernd Ebersberger & Horst Hanusch & Jens J. Krüger & Andreas Pyka, 2004. "The Twin Peaks in National Income. Parametric and Nonparametric Estimates," Revue économique, Presses de Sciences-Po, vol. 55(6), pages 1127-1144.
- Jens J. Krüger, 2001. "The Global Trends of Total Factor Productivity. Evidence from the Nonparametric Malmquist Index Approach," Working Paper Series B 2001-01, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultïät.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dr. Albrecht Bossert).
If references are entirely missing, you can add them using this form.