1110 The Econometrics of Convergence
steady-state. Time series evidence against divergence does not distinguish between
conditional and unconditional convergence. Further, cross-section, panel, and
time series approaches to convergence not only yield different results, but are pred-
icated on different views of the nature of transitory versus steady-state behavior of
economies, differences that themselves remain hard to test.
None of this is to say that the study of convergence is not a meaningful or
productive subject for research. Clearly, considerable progress has been made, and
Phillips and Sul (2006) represents a key first step in integrating the transitory and
steady-state perspectives. Much remains to be done, and research on convergence
should continue to develop in interesting ways. Our belief is that progress is most
likely if the economic content of specific versions of convergence is placed at the
center of the analysis, so that statistical sophistication is not an end in itself.
Further, we think that more attention should be made to time horizons. Much
of the convergence literature has treated the question as a zero–one outcome,
whereas it is probably more sensible to ask questions about partial convergence
over shorter horizons. While attention to convergence rates addresses this ques-
tion, it generally has not focused on understanding differences in timing across
regions or how timing is affected by various initial conditions. These questions
are especially important in assessing anti-poverty policies such as those advocated
by the United Nations in the Millennium Development Goals, and they perhaps
matter for introducing some much needed modesty into the growth literature.
Finally, we see value in shifting discussions of convergence away from national
per capita incomes. Cross-country differences in mortality and morbidity are an
obvious context where convergence is of intrinsic interest. In addition, we see some
scope for considering convergence for units outside the nation state. This seems
clear when one considers the effects of institutions and culture on economic activ-
ity. We go so far as to conjecture that important aspects of long-run persistence in
national incomes mirror long-term divergence in phenomena that are not nation-
specific, which is, of course, an idea that goes back to Max Weber. Thomas Macaulay
wrote,^32 comparing the Catholic Church to the British Empire: “she may still exist
in undiminished vigor when some traveler from New Zealand shall, in the midst
of a vast solitude, take his stand on a broken arch of London Bridge to sketch the
ruins of St. Paul’s,” which well illustrates how all claims of convergence versus
divergence or permanence versus transience depend on the choice of context.
Notes
- Quotations are taken from the Penguin edition.
- See Durlauf (1996) and the subsequent papers in the July 1996Economic Journal; Durlauf
and Quah (1999), Islam (2003), Barro and Sala-i-Martin (2004), and Durlauf, Johnson
and Temple (2005) for,inter alia, surveys of the convergence literature. - Abramovitz (1986) also usesσ-convergence, which we will discuss below.
- Mankiw (1995, p. 301), for example, argues that for “understanding international expe-
rience, the best assumption may be that all countries have access to the same pool
of knowledge, but differ by the degree to which they take advantage of this knowl-
edge by investing in physical and human capital.” Dowrick and Rogers (2002) argue