Convergence of GDP per capita in advanced countries over the twentieth century
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Convergence of GDP per capita in advanced countries over the twentieth century Antonin Bergeaud1 · Gilbert Cette1,2 · Rémy Lecat1,2 Received: 1 September 2016 / Accepted: 15 July 2019 © Springer-Verlag GmbH Germany, part of Springer Nature 2019
Abstract This study compares GDP per capita levels and growth rates across 17 advanced economies over the period 1890–2013 using an accounting breakdown and runs Phillips and Sul (Econometrica 75(6):1771–1855, 2007) convergence tests. An overall convergence process has been at work among advanced economies, mainly after WWII, driven mostly by capital intensity and then TFP, while trends in hours worked and employment rates are disparate. However, this convergence process came to a halt during technology shocks, during the two world wars and since the 1990s, with the convergence of advanced economies stopping far from the level of US GDP per capita. Keywords GDP per capita · Productivity · Convergence · Technological change · Global history JEL Classification N10 · O47 · E20
1 Introduction The abundant literature devoted to comparisons of GDP per capita across countries has mainly focused on two related questions: (i) is there a convergence of GDP per
Electronic supplementary material The online version of this article (https://doi.org/10.1007/s00181019-01761-x) contains supplementary material, which is available to authorized users.
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Rémy Lecat [email protected] Antonin Bergeaud [email protected] Gilbert Cette [email protected]
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Banque de France, Paris, France
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AMSE, Marseille, France
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capita across countries and (ii) what factors better explain growth in GDP per capita? Many answers have been put forward (see Islam 2003 for a summary). The most general view is that economic development relies on the social capability of a country making it cost effective to adopt the leaders technology (Abramovitz and David 1996; Temple and Johnson 1998). Social capability is a generic term embracing the quality of production factors and the ability to adopt new technologies and assigns a particularly important role to the quality of institutions and to the general level of education (see for example Barro 1991; Barro and Sala-i-Martin 1997; Hall and Jones 1999, and, for more recent assessment, Aghion and Howitt 2008; Madsen 2010b, a or Barro 2015). Among the most important institutional factors, it is worth mentioning property rights, labour and product market regulations, financial system development and regulations, the quality of the legal system and even democracy, as shown by Acemoglu et al. (2019). Technical progress and innovation crucially depend on these institutional and educational factors (see for example Aghion and Howitt 1998, 2006, 2008) whose role could have increased over the last decades, as suggested by Crafts and O’Rourke (2014). Observed differences in GDP levels and advanced economies failure to catch up with the USA could thus result from a failure to adopt the leading practices for these fa
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