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Detecting Technological Catch-Up in Economic Convergence

  • F. Pigliaru


Our aim is to address the problem of measuring how much of the convergence that we observe is due to convergence in technology versus convergence in capital-labour ratios, in the absence of data on the level of technology. To this aim, we first develop a growth model where technology accumulation in lagging economies depends on their propensity to innovate and on technological spillovers, and convergence is due both to capital deepening and to catch-up. We study the transitional dynamics of the model to show how to discriminate empirically among the following three hypotheses - (i) convergence due to capital deepening with technology levels uniform across economies, as in Mankiw, Romer and Weil (1992); (ii) convergence due to capital deepening with stationary differences in individual technologies, as in Islam (1995); (iii) convergence due to both catch-up and capital deepening (non-stationary differences in individual technologies. We show that, in the absence of TFP data, hypotheses (ii) and (iii) may be difficult to distinguish in cross-section or panel data. We suggest that discrimination can be nevertheless obtained by exploiting the fact that if heterogeneity is the source of catch-up, technology growth is not uniform across countries and the initial differences in technology levels may tend to decrease over time. Given this implication, one way to discriminate between (ii) and (iii) would be to test whether estimates of fixed-effects in sub-periods show the pattern implied by either hypothesis.

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Paper provided by Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia in its series Working Paper CRENoS with number 199902.

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Date of creation: 1999
Date of revision:
Handle: RePEc:cns:cnscwp:199902
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  1. repec:tpr:qjecon:v:113:y:1998:i:1:p:325-329 is not listed on IDEAS
  2. Barro, Robert J & Sala-i-Martin, Xavier, 1997. " Technological Diffusion, Convergence, and Growth," Journal of Economic Growth, Springer, vol. 2(1), pages 1-26, March.
  3. Steven N. Durlauf & Danny T. Quah, 1998. "The New Empirics of Economic Growth," Working Papers 98-01-012, Santa Fe Institute.
  4. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
  5. repec:tpr:qjecon:v:113:y:1998:i:1:p:319-323 is not listed on IDEAS
  6. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
  7. Bernard, Andrew B & Jones, Charles I, 1996. "Technology and Convergence," Economic Journal, Royal Economic Society, vol. 106(437), pages 1037-44, July.
  8. repec:tpr:qjecon:v:107:y:1992:i:2:p:407-37 is not listed on IDEAS
  9. Jones, Charles I, 1997. " Convergence Revisited," Journal of Economic Growth, Springer, vol. 2(2), pages 131-53, July.
  10. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
  11. N. Gregory Mankiw & David Romer & David N. Weil, 1990. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
  12. Jan Fagerberg & Bart Verspagen & Marjolein Cani�ls, 1997. "Technology, Growth and Unemployment across European Regions," Regional Studies, Taylor & Francis Journals, vol. 31(5), pages 457-466.
  13. Maurizio Pugno, 1993. "On Competing Theories of Economic Growth: a Cross-country Evidence," Department of Economics Working Papers 9309, Department of Economics, University of Trento, Italia.
  14. repec:tpr:qjecon:v:110:y:1995:i:4:p:1127-70 is not listed on IDEAS
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