South-North Convergence from a New Perspective

24 Pages Posted: 29 Nov 2013

Date Written: November 20, 2013

Abstract

This North-South model of Schumpeterian endogenous growth combines a market, productivity and knowledge effect. A set of various convergent and divergent growth paths is derived that is much richer than in the literature so far. South-North convergence based on North-South technology diffusion through intermediate goods trade is guaranteed if the knowledge effect dominates the productivity effect. Moreover, a larger Southern market expands the area of convergence and can prevent divergence. Not only a larger Southern market size, but also a higher Southern steady state growth rate benefit the North so that convergence is desirable for both, the South and the North.

Keywords: Schumpeter, endogenous growth, technology diffusion, convergence, poverty trap

JEL Classification: F18, O11, O33, O41

Suggested Citation

Hübler, Michael, South-North Convergence from a New Perspective (November 20, 2013). ZEW - Centre for European Economic Research Discussion Paper No. 13-104, Available at SSRN: https://ssrn.com/abstract=2360546 or http://dx.doi.org/10.2139/ssrn.2360546

Michael Hübler (Contact Author)

Leibniz Universität Hannover ( email )

Institute f. Environm. Economics and World Trade
Koenigsworther Platz 1
30167 Hannover, DE 30167
Germany

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