Convergence and Growth Amongst Rich and Poor
by Monojit Chatterji (March 1992)
This paper reexamines the Baumol-Wolff (1988) hypothesis that there exists an exclusive international Convergence Club of rich nations whose members will move nearer each other with the passage of time. We argue that the Baumol-Wolff analysis does not really justify such a claim except in a relatively weak sense. Even in this weak sense, we find that it is the poorer nations and not the richer who show convergence tendencies. We also show that the Diffusion hypothesis of Gomulka (1971) offers better hopes of identifying such a Convergence Club in a more meaningful sense. Using a generalization of the Gomulka hypothesis, we find that there are two mutually exclusive Convergence Clubs—one for the richer nations and one for the poorer ones.
Key words: Convergence Club, Growth JEL Codes: O3, O4