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Convergence and Growth Linkages Between North and South

  • John F. Helliwell
  • Alan Chung

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.

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File URL: http://www.nber.org/papers/w3948.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3948.

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Date of creation: Jan 1992
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Publication status: published as North-South Linkages and International Macroeconomic Policy, Vines, Davidand David Currie, eds., Cambridge: Cambridge University Press, 1995,pp. 77-100.
Handle: RePEc:nbr:nberwo:3948
Note: EFG
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  19. John F. Helliwell & Alan Chung, 1991. "Macroeconomic Convergence: International Transmission of Growth and Technical Progress," NBER Chapters, in: International Economic Transactions: Issues in Measurement and Empirical Research, pages 388-436 National Bureau of Economic Research, Inc.
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