English, Article edition: Economic Growth And Convergence Hans Seidel

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Physical Description
  • article
Language
  • English

Edition details

Title
  • Economic Growth And Convergence
Author
  • Hans Seidel
Physical Description
  • article
Notes
  • Does the gap between rich countries and poor countries gradually narrow and, if so, how much time should the catching-up process be expected to take? These are questions of great social and political relevance, to which there are, however, no general and straightforward answers. Academic research on economic growth, based on cross-country analysis, found that income differentials between comparable countries are reduced by 2 percent per year ("catching-up or ?-coefficient). Still, convergence is not a generally observed phenomenon; it takes place only between countries of similar socio-economic structure, and it proceeds only slowly. At an annual pace of 2 percent it takes almost 35 years to make up half of an original income gap. Carrying further the existing empirical analysis the article presents estimates of country-specific catching-up coefficients for European OECD countries and, for the sake of comparison, for Japan, using time series for the period 1954-1992. The U.S. serve as the reference country. According to these estimates, the catching-up coefficient is actually close to 2 percent for the European Union (EU) as a whole, but country-specific coefficients differ markedly. Moreover, the catching up of western Europe appears to have lost momentum since the 1973 oil price shock. A group of central and northern European OECD countries, which used to be among the less advanced industrialized societies, made the biggest jump forward (with a ?-coefficient of over 3). In the mid-fifties, these countries had been at a per-capita income level less than half (Finland, Italy, Austria) or just half (Germany, France, Norway) that of the U.S. On the other hand, the U.K. and Sweden – which both had attained a per-capita income of two thirds of the U.S. level by the mid-fifties – exhibited catching-up coefficients far below 2. Likewise, the performance of the European periphery was less than strong, with Turkey holding the bottom rank (?-coefficient below 1). Thus, the economically weaker European countries appear to have lost ground vis-à-vis the more dynamic "north", despite substantial transfers and capital inflows (this holds particularly for the period as from 1973). One of the consequences of this development is that within Europe a group of countries has emerged with similar per-capita income, strong internal trade links and homogeneous technology. The rank order in the income "league table" among these countries depends largely on random factors – like discrepancies in statistical assessment, different cyclical positions, etc. – rather than on those relevant for long-term perspectives.
  • Wirtschaftswachstum und Konvergenz; Economic Growth And Convergence
  • RePEc:wfo:monber:y:1995:i:1:p:48-62
Language
  • English
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