DP1274 | Catch-up, Growth and Convergence in the OECD


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This paper analyses the sources of post-war growth and convergence in the OECD using an extension of Mankiw, Romer and Weil's (1992) model in which the rate of technical progress is determined endogenously by the level of R&D spending and a process of technological catch-up. The results indicate that the impact of R&D investment on growth has been significant. Technological catch-up is found to be very fast and seems to have played an important role in OECD convergence during the first half of the sample period. The exhaustion of this effect, moreover, may help explain the slowdown of growth and convergence after the mid-1970s, and suggests that further convergence will require an important investment effort on the part of poorer countries. Finally, there is evidence that the neoclassical convergence effect is also operative but its contribution to convergence in output per worker has been minor.