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Did Globalization Lead to Segmentation? Identifying Cross-Country Growth Regimes in the Long-Run

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  • Gianfranco Di Vaio

    ()
    (Department of Economics and Business, LUISS Guido Carli University)

  • Kerstin Enflo

    ()
    (Department of Economic History, Lund University)

Abstract

Economic historians have stressed that income convergence was a key feature of the OECD-club and that globalization was among the accelerating forces of this process in the long-run. This view has however been challenged, since it suffers from an ad hoc selection of countries. In the paper, a mixture model is applied to a sample of 64 countries to endogenously analyze the cross-country growth behavior over the period 1870-2003. Results show that growth patterns were segmented in two worldwide regimes, the first one being characterized by convergence, and the other one denoted by divergence. Interestingly, when three historical epochs are analyzed separately (1870-1913; 1913-1950; and 1950-2003), the dynamics which come to dominate over the whole period emerged only during the post-1950 years. In contrast, the First Global Wave was marked by global divergence. Therefore, history does not seem to provide unambiguous evidence about globalization and convergence.

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Bibliographic Info

Paper provided by Dipartimento di Economia e Finanza, LUISS Guido Carli in its series Working Papers CELEG with number 0902.

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Date of creation: 2009
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Handle: RePEc:lui:celegw:0902

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Keywords: Globalization; Economic growth; Income convergence; Multiple regimes; Mixture models;

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