Research

Economic Growth and Convergence

Divergence (Unconditional, Conditional and in OECD)   October, 2025.

One of the fundamental assumptions adopted by economists since mid-1980s has been that faster growth of per capita income of a poor country reduces its income gap from a richer country - thereby leading to inter-country income convergence.  This paper proves this essential element of the convergence hypothesis is not true - the income gap of the faster growing poor country can increase.  Further, β-convergence does not imply income differences between any pair of countries decrease.  After the convergence hypothesis was found true empirically for OECD but not for wider groups of countries, it was recast as conditional on investment proportion, labor-augmenting technological progress and human capital.  Defining convergence rate, distinguishing between growth and convergence regressions, and using data from three different sources from 1950/1960 to 2019/2022/2024, this paper demonstrates the prevalence of both unconditional and conditional divergence from the smallest (OECD) to the largest group of countries.  Further, the lower the initial income greater is the divergence rate.  The reason for income divergence is the divergence in TFP from (instead of the expected convergence to) the world technological frontier.  Again, lower  the initial income greater is the divergence rate in TFP from the world technological frontier.  The hope that this century will witness convergence in contrast to the divergence of the last two centuries is unlikely to be realized. 

Growth Accounting: Do the Proximate Factors for Slowdowns Differ?  September, 2025

Incomes rarely grow in a linear path over more than a decade. Whether growth accounting for accelerations differs from slowdowns for the same countries has not been completely examined.  This paper undertakes this analysis to uncover dominant proximate factor for growth.  It uses data for one geographical region, Sub-Saharan Africa (to reduce parametric heterogeneity), for 66 years from PWT.  The two periods are 20-30 years long, and separate accounting for the two reveals human capital primarily explaining growth – not revealed by combined observations. It provides evidence that averaging over ten years/annualizing growth rates suppress annual variations useful for longitudinal estimation 

EU Accession, Institutional Change, Growth and Human Capital, Published 17 June, 2025, Economies 2025, 13(6), 177; available at https://doi:10.3390/economies13060177 

This paper studies effects of initial institutions and improvement in institutions upon joining the EU on growth using the experience of ex-socialist countries that joined EU.  These countries experienced growth boosts post-EU accession, and the boost was due to increased contribution of human capital. Their skilled labor needed the right institutions to unlock its potential.

State of the Developing World: PPP Income, Catching-Up/Falling Behind, and No Growth, June 2021

See abstract at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2909338

Privatization and Growth: Natural Experiment of European Economies in Transition, MPRA Paper No. 96080, 28 September, 2019, available at https://mpra.ub.uni-muenchen.de/96080 

Income Convergence and The Catch-Up Index.  North American Journal of Economics and Finance.  Vol. 48, April 2019, pages 613-627, available at https://doi.org/10.1016/j.najef.2018.07.017