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How Does Foreign Direct Investment Promote Economic Growth? Exploring the Effects of Financial Markets on Linkages

Standard economic indicators suggest that the United States experienced long-run economic growth throughout the nineteenth century. However, biological indicators, including human stature, offer a different picture, rising early in the century, falling (on average) mid-century, and rising again at the end of the century. This pattern varied across geographical regions. Using a unique data set, consisting of mean adult stature by state, we test for convergence in stature among states in the nineteenth century. We find that during the period of declining mean stature, heights actually diverged. Later in the century we find a type of “negative” convergence indicating that stature among states tended to converge to a new, lower steady state. Only towards the end of the century do we find classic convergence behavior. We argue that the diversity of economic experiences across regions, e.g. urbanization, industrialization, and transportation improvements, explain this pattern of divergence and then convergence.

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Paper provided by Department of Economics, Louisiana State University in its series Departmental Working Papers with number 2007-01.

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