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

Listed author(s):
  • Mukherjee, D.

    ()

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.

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File URL: http://www.usc.es/economet/reviews/eers622.pdf
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Article provided by Euro-American Association of Economic Development in its journal Regional and Sectoral Economic Studies.

Volume (Year): 6 (2006)
Issue (Month): 2 ()
Pages:

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Handle: RePEc:eaa:eerese:v:6:y2006:i:6_9
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  1. Chowdhury, K, 2005. "What´s Happening to Per Capita Gdp in the ASEAN Countries?. An Analysis of Convergence, 1960-2001," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 5(3).
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  8. Li, Qi & Stengos, Thanasis, 1996. "Semiparametric estimation of partially linear panel data models," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 389-397.
  9. anonymous, 1995. "Does the bouncing ball lead to economic growth?," Regional Update, Federal Reserve Bank of Atlanta, issue Jul, pages 1-2,4-6.
  10. J. Bradford De Long, "undated". "Productivity Growth, Convergence, and Welfare: Comment," J. Bradford De Long's Working Papers _129, University of California at Berkeley, Economics Department.
  11. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
  12. Xavier Sala-I-Martin, 1997. "Transfers, Social Safety Nets, and Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 44(1), pages 81-102, March.
  13. Robert J. Barro, 2012. "Inflation and Economic Growth," CEMA Working Papers 568, China Economics and Management Academy, Central University of Finance and Economics.
  14. Bernard, Andrew B & Jones, Charles I, 1996. "Comparing Apples to Oranges: Productivity Convergence and Measurement across Industries and Countries," American Economic Review, American Economic Association, vol. 86(5), pages 1216-1238, December.
  15. Temel, T. & Tansel, A. & Gungor, N.D., 2005. "Convergence of Sectoral Productivity in Turkish Provinces: A Markov Chains Model," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 2(2), pages 65-84.
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  17. 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 1072-1085, December.
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