Corrupt Clubs and the Convergence Hypothesis

Naved Ahmad


Convergence is defined as the decreasing gap of GDP growth
rates between leading and lagging countries. This thesis is based on the
Veblen’s idea of “Advantages of Backwardness”. It states that a less
developed country tends to grow, at a rate which is inversely
proportional to its initial GDP per capita; that is, faster than more
advanced countries. There are several reasons for this convergence
across different countries. First, there is a scope for poor nations to
absorb existing technology and to catch up advanced countries if the gap
between country’s technologies is larger. Second, the development
process is often characterised by a shift of resources from low
productivity agriculture sector to high productivity industrial sector.
The process certainly benefits more the poor nations because the
capacity for such shift is more in poor countries than in rich

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