Taking as a point of departure the classical model of Schumpeterian competition proposed by Nelson and Winter, this work expands it by including two sectors and a North-South dynamics, with a view to analyzing how institutions and technological regimes affect the processes of convergence and divergence in the international economy. The model highlights some microeconomic variables that play a key role in shaping convergence and divergence, like the amount of resources that firms devote to R&D and their efforts to boost the diffusion of technology. The results suggest a view of convergence based on strong learning efforts in less developed economies. Convergence requires institutions favorable to innovation when the technological regime is science-based. On the other hand, when the regime is cumulative, imitation could offer a promising avenue for catching-up with the technological leaders. Finally, this work also analyses the strength of the model results using Montecarlo method and probability density graphs.
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