Catch-up and convergence: a model of cumulative growth

This article builds a model of cumulative growth in order to explain the patterns of convergence and divergence in levels of productivity for a large sample of developed and developing countries. Determinants of productivity growth are endogenized: investment equipment share in GDP, innovative activity and the level of schooling. The catch-up hypothesis states that lagging countries should enjoy a higher rate of productivity increase. In fact, this hypothesis must be qualified, countries that possess a ‘social capability’ can catch up to the technological leaders. The model presented here tries to take account of some important determinants of the social capability. The growth of productivity rests on a cumulative growth mechanism based on investment, innovation and education. The model is estimated for a sample of 59 countries over the period 1960–85. Contrary to most recent studies on the subject, a general pattern of divergence rather than convergence in productivity levels is found.