Productivity

the convergence hypothesis

Abstract

High rates of population growth and productivity are basic aspects of modern economic growth, which is based on technological innovations and their diffusion throughout the economy and between countries. However, innovations and their diffusion do not occur equally across countries. This raises a basic question: Do per capita income differentials between countries tend to widen or narrow? Available data show: first, that differentials tend to widen between developed and underdeveloped countries; Second, this differential tends to decrease among developed countries, especially among OECD countries - Convergence Hypothesis. This paper analyzes the process of convergence of labor productivity for the OECD group of countries. This is a theme that in the last decades of the last century was caused by the relative loss of leadership of the American economy, in the area of ​​labor productivity mainly when compared to the performance presented by Japan. However, it is argued that the observed loss of leadership of the American economy is more apparent than real. First, because the high growth rates of the US economy and productivity observed in the postwar era are mainly due to a “lost time” recovery effort, more precisely to a catch-up process. Second, instead of a process of convergence, in reality, what is observed is a loss of the competitive capacity of the US economy in the face of weakening US leadership in the high-tech industries sector. Third, because this decline is associated with the diminishing importance of the role of national borders and the industrial centers based on their borders, this decline, considered as an important fact for the apparent process of convergence.