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Industrial development and the convergence question

  • Marvin Goodfriend
  • John McDermott

The paper studies endogenous world balanced growth equilibria in which national learning productivity differentials govern relative per capita products. Learning productivities depend on the national share of world specialized-goods production, national and world scale, and familiarity with the foreign economy. Familiarity indexes the extent to which imported specialized goods enhance learning productivity. We find that mutual familiarization causes per capita products to converge. Unfamiliar economies diverge substantially and persistently. Unilateral familiarization of a less-developed country (LDC) with the leading economy causes the LDC to catch up to, and even overtake, the leader.

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Paper provided by Federal Reserve Bank of Richmond in its series Working Paper with number 99-01.

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Date of creation: 1999
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Handle: RePEc:fip:fedrwp:99-01
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  1. J. Bradford De Long, . "Productivity Growth, Convergence, and Welfare: Comment," J. Bradford De Long's Working Papers _129, University of California at Berkeley, Economics Department.
  2. 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.
  3. Stephen L. Parente & Edward C. Prescott, 1993. "Changes in the wealth of nations," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 3-16.
  4. Duncan Black & Vernon Henderson, 1997. "Urban Growth," NBER Working Papers 6008, National Bureau of Economic Research, Inc.
  5. Marvin Goodfriend & John McDermott, 1994. "Early development," Working Paper 94-02, Federal Reserve Bank of Richmond.
  6. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
  7. Baumol, William J & Wolff, Edward N, 1988. "Productivity Growth, Convergence, and Welfare: Reply," American Economic Review, American Economic Association, vol. 78(5), pages 1155-59, December.
  8. Young, Alwyn, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 369-405, May.
  9. Tamura, Robert, 1991. "Income Convergence in an Endogenous Growth Model," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 522-40, June.
  10. Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(02), pages 385-406, June.
  11. Luis A. Rivera-Batiz & Paul M. Romer, 1990. "Economic Integration and Endogenous Growth," NBER Working Papers 3528, National Bureau of Economic Research, Inc.
  12. Lant Pritchett, 1997. "Divergence, Big Time," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 3-17, Summer.
  13. Ian Harrison, 1987. "Economic review," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 50, september.
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