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In Defence of the Endogenous Growth Theory: "Conditional" and "Unconditional" Convergence in Two-Country AK Models

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  • Parello, Carmelo Pierpaolo

Abstract

Recent studies on cross-country (per capita) income inequality have found evidence for 'unconditional' convergence, and have interpreted this finding as a data rejection for AK growth models. This paper shows that a two-country version of the AK model with learning-by-doing externalities, extended to include international knowledge transfer, is: (i) consistent with the finding of 'unconditional' convergence that characterizes the world economy since mid 1980s; (ii) more effective than Neoclassical growth models to predict all types of convergence/divergence patterns that the empirical growth economists have documented in almost forty years of literature.

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  • Parello, Carmelo Pierpaolo, 2022. "In Defence of the Endogenous Growth Theory: "Conditional" and "Unconditional" Convergence in Two-Country AK Models," MPRA Paper 115092, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:115092
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    References listed on IDEAS

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    More about this item

    Keywords

    'unconditional' convergence; two-country AK model; cross-country knowledge transmission; development policies;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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