An Empirical Analysis of Convergence Hypothesis
A useful contribution of wide ranging debate in the growth literature is that it has put forward a number of testable hypotheses. One of such hypotheses is known as the convergence hypothesis whereby it is postulated that in the long run developing countries would catch-up with the developed countries in terms of per capita income. Although the convergence hypothesis has gained researchers’ interest in recent times, the basic proposition was laid down in the neo-classical growth model of Solow (1956) and Swan (1956). Traditionally Solow-Swan model has been regarded as a theoretically consistent answer to Harrods’s (1939) twin problems of discrepancy between the warranted and natural rates of growth and instability in the growth process. Although Solow- Swan model is designed to study growth process within a single country, the concept of conditional convergence is far from being alien to the model; it in fact forms the core of argument in the attack on Harrod-Domar model [Harrod (1939) and Domar (1946)]. The model predicts that under perfect competition and in the absence of market distortions, an economy converges to equilibrium capital-labour ratio to yield steady state growth rate that is equal to the natural growth rate and is dynamically stable.
Volume (Year): 39 (2000)
Issue (Month): 4 ()
|Contact details of provider:|| Postal: |
Web page: http://www.pide.org.pk
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Romer, Paul M, 1986.
"Increasing Returns and Long-run Growth,"
Journal of Political Economy,
University of Chicago Press, vol. 94(5), pages 1002-37, October.
- Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
- Jones, Charles I, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 495-525, May.
- T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
When requesting a correction, please mention this item's handle: RePEc:pid:journl:v:39:y:2000:i:4:p:729-740. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Khurram Iqbal)
If references are entirely missing, you can add them using this form.