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CONVERGENCE AND DIVERGENCE: A NEW APPROACH, NEW DATA, AND NEW RESULTS

Published online by Cambridge University Press:  24 September 2020

Michele Battisti ,
Gianfranco di Vaio  and
Joseph Zeira
Michele Battisti
Affiliation:
University of Palermo
Gianfranco di Vaio
Affiliation:
Cassa Depositi e Prestiti and LUISS
Joseph Zeira*
Affiliation:
Hebrew University of Jerusalem
*
Address correspondence to: Joseph Zeira, Department of Economics, The Hebrew University of Jerusalem, Mt. Scopus, Jerusalem91905, Israel. e-mail: joseph.zeira@mail.huji.ac.il. Phone: 972-54-6588333. Fax: 972-2-5816071.
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Abstract

Recently, Penn World Tables include new data that enable calculation of total factor productivity in addition to output for a large set of countries. We use these new data to examine convergence and divergence across countries by applying a new approach, which differentiates between the dynamics of output and of productivity. Our empirical results lead to two main new contributions to the literature. The first is on the interpretation of “β-convergence” in “growth regressions.” It means that output per worker in each country converges to productivity but does not imply convergence across countries, since productivity tends to diverge from the global frontier. The second contribution is to the literature, which finds that income gaps across countries are due mainly to differential technology adoption. This paper shows that the gaps in technology are not only large but keep growing over time.

Keywords

Economic GrowthDivergenceConvergenceGlobal FrontierTechnology Adoption
Type
Articles
Information
Macroeconomic Dynamics , Volume 26 , Issue 4 , June 2022 , pp. 945 - 978
Copyright
© 2020 Cambridge University Press

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Footnotes

We are deeply grateful to Steve Durlauf and Andros Kourtellos for their support. We are grateful to an Associate Editor and two Reviewers for their excellent comments. We also received helpful comments from Francesco Caselli, Antonio Ciccone, John Donaldson, Marcus Eberhardt, Roger Farmer, Dan Henderson, Robert Inklaar, Chad Jones, Mario Lavezzi, Hideki Nakamura, Chris Parmeter, Kerry Patterson, Fabiano Schivardi, Thanasis Stengos, John Temple, David Weil, and Pierre Yared. Remaining errors are all ours. The views in this paper are of the authors and do not reflect their affiliated institutions.

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