Do poor countries catch up? Absolute vs. conditional convergence and what the data says.
Warming up the engine…
The Solow prediction that capital-poor economies grow faster: absolutely (all to the same point) only if fundamentals match; conditionally (each to its own steady state) in general.
growth ≈ λ(ln y* − ln y); β-convergence regressions test λ > 0
Poor economies sit on the steep part of the production function where capital earns most, so catch-up is automatic IF saving, institutions, and technology access match. The data verdict: no absolute convergence worldwide, solid conditional convergence, clubs converge internally.
Cite the twin exhibits: East Asia catching up (conditional convergence working) and Sub-Saharan divergence (different steady states).
Now prove you have it
Move the curve to where you think it lands, and get told exactly which part you got right.
Real-world scenarios on this model
Equilibrium at y₀ 80, g 2.0.
Equilibrium: y₀* = 80.0, g* = 2.0
Current equations
Do poor countries catch up? The blue line says they should: starting further behind means more room to grow by adopting what already exists. The dashed line is how fast the frontier itself moves. A country converges until it reaches the crossing.