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Sources of Convergence in the Late Nineteenth Century

  • Alan M. Taylor

Although the empirical growth literature has yielded many findings on postwar convergence patterns, it has had little to say about the determinants of convergence in earlier epochs. This paper investigates convergence for group of seven countries during the period 1870-1914, the last great phase of global convergence before the present postwar era. A standard empirical growth model, the Augmented Solow Model, which includes physical and human capital accumulation, proves unsatisfactory in this setting. Its shortcomings appear to lie in a failure to control for changes in land endowments, a feature of the endogenous frontier dynamics of the period. An alternative neoclassical open-economy factor accumulation model is proposed, which admits capital and labor migration, and may be extended to include a moving frontier. The model explains the observed convergence pattern in the sample, and suggests that factor accumulation patterns were the prime sources of labor productivity convergence from 1870 to 1914. The analysis gives little role to human capital, trade, or technological catch-up as important convergence mechanisms in this group of countries during the era studied. Since factor accumulation was influenced heavily by factor migration in the late nineteenth century, the findings also point to the limited use of conventional closed-economy growth models in this historical setting.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5806.

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Date of creation: Oct 1996
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Publication status: published as European Economic Review, Vol. 43 (September 1999): 1621-1645.
Handle: RePEc:nbr:nberwo:5806
Note: DAE
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  1. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
  2. Williamson, Jeffrey G., 1996. "Globalization, Convergence, and History," The Journal of Economic History, Cambridge University Press, vol. 56(02), pages 277-306, June.
  3. Alan M. Taylor & Jeffrey G. Williamson, 1994. "Convergence in the Age of Mass Migration," NBER Working Papers 4711, National Bureau of Economic Research, Inc.
  4. Williamson Jeffrey G., 1995. "The Evolution of Global Labor Markets since 1830: Background Evidence and Hypotheses," Explorations in Economic History, Elsevier, vol. 32(2), pages 141-196, April.
  5. O'Rourke, Kevin H & Taylor, Alan M & Williamson, Jeffrey G, 1996. "Factor Price Convergence in the Late Nineteenth Century," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(3), pages 499-530, August.
  6. Easterly, William & Kremer, Michael & Pritchett, Lant & Summers, Lawrence H., 1993. "Good policy or good luck?: Country growth performance and temporary shocks," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 459-483, December.
  7. Alan M. Taylor, 1996. "Convergence and International Factor Flows in Theory and History," NBER Working Papers 5798, National Bureau of Economic Research, Inc.
  8. Barro, Robert J. & Mankiw, N Gregory & Sala-i-Martin, Xavier, 1994. "Capital Mobility in Neoclassical Models of Growth," CEPR Discussion Papers 1019, C.E.P.R. Discussion Papers.
  9. N. Gregory Mankiw, 1995. "The Growth of Nations," Harvard Institute of Economic Research Working Papers 1732, Harvard - Institute of Economic Research.
  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. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 3-22, Winter.
  12. Kevin O'Rourke & Jeffrey G. Williamson, 1995. "Open Economy Forces and Late 19th Century Scandinavian Catch-Up," Harvard Institute of Economic Research Working Papers 1709, Harvard - Institute of Economic Research.
  13. Taylor, Alan M., 1992. "External Dependence, Demographic Burdens, and Argentine Economic Decline After the Belle Époque," The Journal of Economic History, Cambridge University Press, vol. 52(04), pages 907-936, December.
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