Convergence in GDP

Abstract

Interest in convergence, that is to say whether poor countries or regions tend to grow faster than rich ones, is relatively recent. The underlying rationale of convergence however is not new, and in closed economies can be easily traced to the premise of diminishing returns to capital, whereas in open economies this premise is reinforced by the movement of capital and technology from rich countries to poor, and of labour from poor countries to rich. Myrdal’s (1957) cumulative causation and Hirschman’s (1958) agglomeration mechanisms and “growth poles” in which the “spread” or “trickle down” effects dominate the “backwash” or “polarization” effects are earlier formulations or variations of the same growth process.