The Question of International Convergence of Per Capita Consumption

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There has been much debate in recent years over whether countries will tend in the long run to converge to the same level of productivity which can be measured in terms of per capita income. In practice, the debate concerns the question of whether poor countries tend to have higher per capita income growth rates than rich ones, or put another way: is there a tendency for poor countries to "catch up"? The purpose of this research is to integrate data and growth theory to focus on the question of economic convergence. This project will involve an empirical and theoretical investigation of the causes of convergence or lack thereof. The approach taken to the question of catching up begins by restating the question as one concerning the effects of initial conditions on subsequent growth. It is the contention in this study that initial per capita income is too aggregate a measure of initial conditions on which to base our expectations of a country's subsequent growth. By disaggregating initial conditions in a growth-theoretic context it is possible to greatly improve our understanding of why some poor countries have grown much faster than rich countries while others have note. This project is important because it will provide new insights about the prospects for economic growth in the less developed countries.