Convergence, Divergence and Geography

Abstract

This paper presents a new mechanism explaining simultaneous convergence among industrialized countries and divergence between this group of countries and the rest of the world. In a world where capital goods are produced in a few centers and exported, I study the adoption of technologies embodied in machines. As the local cost of introducing machines varies from region to region, technology is not adopted everywhere and when it is adopted its intensity varies from place to place. Technological progress diminishes the differences within the group of countries adopting technology but increases the gap between these countries and the rest of the world. The special case of transport costs leads to predictions regarding the geographical dispersion of technology that can be supported by recent research.

Keywords: Convergence, Technology adoption, Geography

JEL Classification: O11, R11, F43