Is there cross-country convergence?

No evidence of sustainable cross-country convergence

We have come to the conclusion that with the exception of a few countries in Asia which exhibited transformational growth, most of the economic achievements in developing economies have been the result of removing inefficiencies, especially in governance and in political institutions. But as is now well known these are merely one-off level effects that, while not unimportant, and in fact necessary in the process of development, nonetheless do not stimulate ongoing economic growth.

What Remains of Cross-Country Convergence?
Authors: Paul Johnson, Chris Papageorgiou
From: Vassar College, International Monetary Fund

The last 20 years have been characterized by strong cross-country convergence

Patel and al. looked at the 43 countries the World Bank classified as “low income” in 1990 and found that 65 percent have grown faster than the high-income average since 1990. The same was true for 82 percent of the 62 middle-income countries circa 1990. Convergence in the recent period, they argue, was the consequence of both improving per capita GDP growth in poor countries and declining growth in rich countries.

Everything You Know about Cross-Country Convergence Is (Now) Wrong
By: Dev Patel, Justin Sandefur, Arvind Subramanian – Harvard University, Center for Global Development, PIIE

Conclusion?

The Johnson-Papageorgiou paper appears to look at evidence during the period 1960-2010 while Patel and al. studied convergence from 1990-2014. They actually don’t contradict each other, argues Dietrich Vollrath, because both can be true at once. The Patel and al. paper tells us that something changed around 1990 such that many poor countries grew faster than rich countries, relative to the period from 1960 to 1990. BUT it doesn’t tell us what or why it changed, or if it will persist.
New evidence on convergence
By: Dietrich E. Vollrath – University of Houston