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Convergence and Growth Linkages Between North and South

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  • John F. Helliwell
  • Alan Chung

Abstract

Using cross-sectional data for 98 countries for 1960-85, this paper shows that growth of per capita GDP depends negatively on initial income levels, as implied by the convergence hypothesis, as well as on international differences in investment rates in physical and human capital. There is some evidence of slight economies of scale (1.06) among the industrial countries. The evidence in favor of the convergence hypothesis is strongest for the countries of the OECD and Latin America, and weakest for Asia. Growth in Latin America and Africa is lower than elsewhere even after allowing for international differences in initial income levels, scale, schooling and capital investment. Analysis of Solow residuals for the OECD countries (for which capital stock data are available) shows convergence in rates of technical progress, suggesting that convergence of per capita GDPs is not Just a function of differences in investment rates. The linkage between per capita GDP and the real exchange rate is found to be strong for the OECD and Asia, weak for Africa and negative for Latin America.

Suggested Citation

  • John F. Helliwell & Alan Chung, 1992. "Convergence and Growth Linkages Between North and South," NBER Working Papers 3948, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3948
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    Cited by:

    1. Helliwell, John F., 1994. "Empirical Linkages Between Democracy and Economic Growth," British Journal of Political Science, Cambridge University Press, vol. 24(02), pages 225-248, April.
    2. Brida, Juan Gabriel & London, Silvia & Risso, Wilson Adrián, 2010. "Economic performance clubs in the Americas: 1955-2003," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    3. Paola Barrientos, 2007. "Theory, History and Evidence of Economic Convergence in Latin America," Development Research Working Paper Series 13/2007, Institute for Advanced Development Studies.
    4. Schneider, Johannes & Ziesemer, Thomas, 1994. "What's New and What's Old in New Growth Theory: Endogenous Technology, Microfoundation, and Growth Rate Predictions," MPRA Paper 56132, University Library of Munich, Germany.
    5. repec:dgr:rugsom:96c10 is not listed on IDEAS
    6. John F. Helliwell, 1994. "International Growth Linkages: Evidence from Asia and the OECD," NBER Chapters,in: Macroeconomic Linkage: Savings, Exchange Rates, and Capital Flows, NBER-EASE Volume 3, pages 7-29 National Bureau of Economic Research, Inc.
    7. Par Hansson & Magnus Henrekson, 1994. "What makes a country socially capable of catching up?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(4), pages 760-783, December.
    8. Magnus Blomstrom & Robert E. Lipsey & Mario Zejan, 1992. "What Explains Developing Country Growth?," NBER Working Papers 4132, National Bureau of Economic Research, Inc.
    9. Norman Sedgley & Bruce Elmslie, 2011. "Do We Still Need Cities? Evidence on Rates of Innovation from Count Data Models of Metropolitan Statistical Area Patents," American Journal of Economics and Sociology, Wiley Blackwell, vol. 70(1), pages 86-108, January.

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