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Divergence, big time

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  • Pritchett, Lant

Abstract

Recently, much attention has been paid in the literature on economic growth to the phenomenon of"conditional convergence,"the tendencies of economies with lower-level incomes to grow faster, conditional on their rate of factor accumulation. The author documents that, regardless of conditional convergence, perhaps the basic fact of modern economic history is massive absolute divergence in the distribution of incomes across countries. Discussions of long-run convergence or divergence has been hindered by the lack of reliable historical estimates of per capita income for poor countries. The author shows that to draw reasonable inferences about whether incomes have converged or diverged does not require historical estimates of per capita income as a plausible lower limit for historical per capita incomes combined with estimates of current income in poor countries places a binding constraint on their historical growth rates. Finally, the author estimates that between 1870 and 1985 the ratio of incomes in the richest and poorest countries increased sixfold, the standard deviation of (natural log) per capita incomes increased by between 60 and 100 percent, and the average income gap between the richest and the poorest countries grew almost ninefold (from $1,500 to over $12,000).

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1522.

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Date of creation: 31 Oct 1995
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Handle: RePEc:wbk:wbrwps:1522

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Keywords: Economic Theory&Research; Economic Conditions and Volatility; Poverty Impact Evaluation; Public Sector Economics&Finance; Public Institution Analysis&Assessment; Economic Theory&Research; Inequality; Achieving Shared Growth; Governance Indicators; Economic Conditions and Volatility;

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  1. Barro, Robert J, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 106(2), pages 407-43, May.
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  6. Easterly, William & Kremer, Michael & Pritchett, Lant & Summers, Lawrence H., 1993. "Good policy or good luck?: Country growth performance and temporary shocks," Journal of Monetary Economics, Elsevier, Elsevier, vol. 32(3), pages 459-483, December.
  7. Ravallion, Martin & Datt, Gaurav & van de Walle, Dominique, 1991. "Quantifying Absolute Poverty in the Developing World," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 37(4), pages 345-61, December.
  8. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(2), pages 407-37, May.
  9. Hanson, John II, 1991. "Third world incomes before world war I: Further evidence," Explorations in Economic History, Elsevier, Elsevier, vol. 28(3), pages 367-379, July.
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  11. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. " Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, Springer, vol. 1(3), pages 363-89, September.
  12. Pritchett, Lant, 1996. "Population growth, factor accumulation, and productivity," Policy Research Working Paper Series 1567, The World Bank.
  13. Hanson, John II, 1988. "Third world incomes before World War I: Some comparisons," Explorations in Economic History, Elsevier, Elsevier, vol. 25(3), pages 323-336, July.
  14. Chen, Shaohua & Datt, Gaurav & Ravallion, Martin, 1994. "Is Poverty Increasing in the Developing World?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 40(4), pages 359-76, December.
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  16. Pritchett, Lant, 1996. "Where has all the education gone?," Policy Research Working Paper Series 1581, The World Bank.
  17. Canova, Fabio & Marcet, Albert, 1995. "The Poor Stay Poor: Non-Convergence Across Countries and Regions," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1265, C.E.P.R. Discussion Papers.
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  19. Nuxoll, Daniel A, 1994. "Differences in Relative Prices and International Differences in Growth Rates," American Economic Review, American Economic Association, American Economic Association, vol. 84(5), pages 1423-36, December.
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  21. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Economic Convergence and Economic Policies," NBER Working Papers 5039, National Bureau of Economic Research, Inc.
  22. Danny Quah, 1995. "Empirics for economic growth and convergence," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 2136, London School of Economics and Political Science, LSE Library.
  23. Lant Pritchett & Lawrence H. Summers, 1996. "Wealthier is Healthier," Journal of Human Resources, University of Wisconsin Press, vol. 31(4), pages 841-868.
  24. Ben-David, Dan, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 108(3), pages 653-79, August.
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  1. ¿Argie crisis es anagrama de crisis griega?
    by Lucas Llach in La ciencia maldita on 2010-04-28 16:27:56
  2. ¿Argie crisis es anagrama de crisis griega?
    by Lucas Llach in La ciencia maldita on 2010-04-28 16:27:56
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