Question

In a recent study, Turkish economist Dani Rodrik found that convergence does hold worldwide, but only in manufacturing industries. Why are manufacturing industries more likely to exhibit convergence than economies as a whole? What are some factors that account for the lack of economy-wide convergence despite apparent convergence in manufacturing industries?

Answer 1

THE VIEWS EXPRESSED IN THE HKS FACULTY RESEARCH WORKING PAPER SERIES ARE THOSE OF THE AUTHOR AND DO NOT NECESSARILY REFLECT THOSE OF THE JOHN F. KENNEDY SCHOOL OF GOVERNMENT OR OF HARVARD UNIVERSITY FACULTY RESEARCH WORKING PAPERS HAVE NOT UNDERGOE FORMAL REVIEW AND APPROVAL. SUCH PAPERS ARE INCLUDED IN THE SERIES TO ELICIT FEEDBACK AND APPROVAL.SUCH  PAPERS ARE INCLUDED IN THIS SERIES TO ELICIT FEEDBACK AND ENCOURAGE DEBATE ON IMPORTANT PUBLIC POLICY CHALLENGES . COPYRIGHT BELONGS TO THE AUTHOR . PAPERS MAY BE DOWNLOADED FOR PERSONEL USE ONLY..

A VERY SPECIAL DECADE :

THE WORLD ECONOMY EXPERIENCED VERY RAPID GROWTH IN THE DECADE BEFORE THE GLOBAL FINANCIAL CRISIS. IN FACT, ONCE WE SMOOTH OUT THE ANNUAL VARIATIONS, GROWTH REACHED LEVELS THAT WERE EVEN HIGHER THAN THE IN THE IMMEDIATE AFTERNATH OF WORLD WAR 2 WHICH IS REMARKABLE IN VIEW OF THE FACT THAT GROWTH IN THE EARLY 1950s WAS BOOSTED BY RECONSTRUCTION AND RECOVERY FROM THE WAR.

FEATURES :

THE FACT THAT A COUNTRY IS POOR DOES NOT GURANTEE THAT CATH UP GROWTH WILL BE ACHIEVED . MOSES ABRAMOVITES EMPHAISES THE NEED FOR SOCIAL CAPABILITIES TO BENEFIT FROM CATCH UP GROWTH.

THESE INCLUDE AN ABILITY TO ABSORB NEW TECHNOLOGY , ATTRACT CAPITAL AND PARTICIPATE IN GLOBAL MARKETS.

THESE PREREQUISTES MUST BE IN PLACE IN AN ECONOMY BEFORE CATCH UP GROWTH CAN OCCUR, AND EXPLAIN WHY THERE IS STILL DIVERGENCE INNTHE WORLD TODAY.

THE THEORY ALSO ASSUMES THAT TECHNOLOGY IS FREELY TRADED AND AVAILABLE TO DEVELOPING COUNTRIES THAT ARE ATTEMPTING TO DEVELOPING COUNTRIES THAT ARE ATTEMPTING TO CATCH UP.