Are Energy Endowed Countries Responsible for Conditional Convergence?

Abstract

We examine the relationship between fossil fuel (FF) endowments and economic convergence. Countries with plausibly exogenous FF endowments show patterns of convergence, as indicated by standard convergence tests. By contrast, we find no evidence of convergence among countries without FF endowments. These patterns of convergence are consistent across measures of physical capital, human capital, and total factor productivity. We discuss the implications of this result for economic development and comment on its implications for global climate policy.

Keywords: economic convergence, fossil fuel endowments, resource curse, economic growth

JEL Classification: O13, O47, Q32, Q43