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CAN THE POOR COUNTRIES CATCH UP? MIXED RESULTS FROM EXTENDED SOURCES OF GROWTH PROJECTIONS FOR THE EARLY 21 st CENTURY
Author(s) -
Taylor Lance,
Rada Codrina
Publication year - 2007
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.2007.00263.x
Subject(s) - economics , convergence (economics) , productivity , per capita income , human capital , capital (architecture) , capital accumulation , physical capital , per capita , liberalization , developing country , capital deepening , labour economics , population , monetary economics , macroeconomics , capital formation , financial capital , economic growth , market economy , history , demography , archaeology , sociology
Illustrative projections of per capita income gaps between two groups of developing economies and the rich economies for the period 1998–2030 are made on the basis of an extended sources of growth equation which accounts for interactions between trends in capital and labor productivity. The equation takes into consideration Kaldor–Verdoorn effects, possible impacts on labor productivity of trade liberalization and/or astute industrial policy, human and physical capital accumulation, employment and population growth, shifting shares of labor in income and traded goods in output, shifts in capital productivity, productivity growth retardation due to convergence and specific regional effects. Under optimistic assumptions about all these factors and in the historically unprecedented absence of adverse macroeconomic shocks over three decades, relative and absolute convergence of both regions to the rich countries may be possible.