Revisiting Growth and Convergence : Is Africa Catching Up?

Abstract

This article summarizes the publication "Revisiting Gowth and Convergence: Is Africa Catching Up?" The neoclassical Solow framework has been the workhorse for empirical analysis of growth in industrial and developing countries. In this framework, steady state economic growth depends on exogenous technological progress and population growth. In particular, without technological progress, output per capita does not grow. An important feature of the neoclassical model that has been the central focus of empirical work is the convergence property: output levels of countries with similar technologies converge to a given level in the steady state. In the end, ceteris paribus, the lagging poor countries will tend to catch up with the rich. Using cross-sectional analysis the majority of the literature seems to have reached a consensus on the issue of convergence: the poor do catch up with the rich, at a rate of 2-3 percent per year. The obvious shortcoming of the neoclassical model is that long-run per capita growth is determined by the exogenous rate of technological progress. Work on endogenous growth theory has introduced alternative models that explain long-run growth, and provide a theory of technological progress: growth is generated by factors other than exogenous technical change.