On Cross‐country Growth and Convergence: Evidence from African and OECD Countries

This paper draws on neoclassical and endogenous growth theories to investigate convergence and determinants of per capita growth rates in African and OECD countries. We employ a panel data, general method of moments estimator, which eliminates the inconsistencies arising from omitted variable and/or endogeneity bias that plague some of the empirical work in the literature. The results indicate that for both African and OECD samples: (i) per capita incomes converge to their steady‐state levels at rates in excess of 10%, in sharp contrast to the 2–3% reported in the literature; (ii) various economic factors, such as initial conditions, investment, population growth, human capital development, government consumption, openness, financial development and the political environment, contribute to economic growth; and (iii) the Solow model both in its textbook and augmented form is not consistent with the evidence presented and thus cannot account for the important features of cross‐country income differences.