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GROWTH AND CONVERGENCE THROUGH TECHNOLOGICAL INTERDEPENDENCE

Published online by Cambridge University Press:  09 December 2020

Wei Jin  and
Yixiao Zhou
Wei Jin*
Affiliation:
Tianjin University
Yixiao Zhou
Affiliation:
Australian National University
*
Address correspondence to: Wei Jin, Ma Yinchu School of Economics, Tianjin University, No. 92 Weijin Road, Tianjin 300072, China. e-mail: wei.jin19@outlook.com. Phone: (+86) 13616513164.
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Abstract

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This paper presents a multi-country version of the Ramsey growth model with cross-country technological interdependence. The results rationalize several stylized facts about growth and convergence. First, individual countries tend to converge toward country-specific balanced growth paths rather than steady-state equilibria. Second, an economy that accounts for a smaller share of the world technology distribution harnesses the “advantages of backwardness” to catch up at a faster speed. Third, countries grow at different rates during the phase of transitional dynamics. However, technological interdependence creates a force toward cross-country convergence in the growth rate and stability of world income distribution in the long run. Finally, cross-country differences in structural characteristics and initial conditions lead to divergences in the level of income per capita.

Keywords

ConvergenceEndogenous GrowthTechnological InterdependenceAdvantages of Backwardness

Information

Type
Articles
Information
Macroeconomic Dynamics , Volume 26 , Issue 5 , July 2022 , pp. 1338 - 1374
Copyright
© Cambridge University Press 2020

Footnotes

We are grateful to the detailed comments and advice of William Barnett (the editor), Oded Galor (the coeditor), and anonymous referees. We also thank Angus Chu, James Madison, and participants at: 2018 Asian Meeting of the Econometric Society (Seoul), 2019 Asian Meeting of the Econometric Society (Xiamen), 2019 Econometric Society Australasian Meeting (Perth), 2019 China International Conference in Macroeconomics (Shenzhen), and various seminars for helpful comments. The usual disclaimer applies.

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