Convergence, Human Capital and International Spillovers

This paper develops a growth model with physical and human capital externalities to- gether with technological interdependence between economies. It leads to a spatial autore- gressive reduced form for the convergence equation characterized by parameter heterogeneity. A locally linear spatial autoregressive speci¯cation is then estimated providing a di(r)erent convergence speed estimate for each country in a sample of 89 countries over the period 1960-1995. Finally, counterfactual density estimates show that our model better ¯ts the observed income distribution than the well known augmented neoclassical growth model.