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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. De Long, J Bradford, 1988. "Productivity Growth, Convergence, and Welfare: Comment," American Economic Review, American Economic Association, vol. 78(5), pages 1138-54, December.
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  3. Pritchett, Lant, 1996. "Where has all the education gone?," Policy Research Working Paper Series 1581, The World Bank.
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  7. Loayza, Norman V. & DEC, 1994. "A test of the international convergence hypothesis using panel data," Policy Research Working Paper Series 1333, The World Bank.
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  9. Sala-i-Martin, X., 1994. "Regional Cohesion: Evidence and the Theories of Regional Growth and Convergence," Papers 716, Yale - Economic Growth Center.
  10. Pritchett, Lant & Summers, Lawrence H., 1993. "Wealthier is healthier," Policy Research Working Paper Series 1150, The World Bank.
  11. Hanson, John II, 1991. "Third world incomes before world war I: Further evidence," Explorations in Economic History, Elsevier, vol. 28(3), pages 367-379, July.
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  14. 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.
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  17. Francesco Caselli & Gerardo Esquivel & Fernando Lefort, 1997. "Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Working Papers Central Bank of Chile 03, Central Bank of Chile.
  18. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June.
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  20. 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, vol. 32(3), pages 459-483, December.
  21. Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers 201, University of Rochester - Center for Economic Research (RCER).
  22. 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.
  23. Danny Quah, 1995. "Empirics for economic growth and convergence," LSE Research Online Documents on Economics 2136, London School of Economics and Political Science, LSE Library.
  24. 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.
  25. Quah, Danny, 1995. "Empirics for Economic Growth and Convergence," CEPR Discussion Papers 1140, C.E.P.R. Discussion Papers.
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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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