A slowing of national income convergence

Abstract

Shocks to the international economy that occurred around 1973 may have altered the rate of convergence of national income across countries. Markov chains are used to examine whether the rate of convergence of national income was different pre- to post-1973 for a cross-section of 104 countries between 1960 and 1990. Results suggest that real GDP per worker did converge continuously, and the rate of convergence was faster before rather than after 1973.