Postscript Wan (2007)

Postscript Wan (2007) - Postscript The encouraging words of...

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Postscript The encouraging words of Professor Solow inspire us for further research; his personal example also calls us to validate our theory by evidence. This note is a down payment. The benchmark model in these Lectures is designed as a first approximation to the potent force of globalization. The phase diagram in the middle panel, Chart P.1, suggests that with both a strong capacity to absorb and plentiful opportunity to emulate, an economy at a mid – level of relative real GDP per capita, can grow faster than a technology leader, and improve further its relative real GDP per capita. It is now time to check its implications against reality. A convenient starting point is the distribution of real GDP per capita across the economies in the world. Based upon the Penn World Table, version 6.2, two specimens of it over 100 economies with data for both 1963 and 2003 1 are displayed in the upper and lower panels of Chart P.1. In discussing the convergence issue, Daniel Quah (1996) explains that beyond the ’pushing back of constraints’ by each economy, there is the additional dimension of how the poor may catch up with the rich 2 , which may cause a bi-modal distribution, or in a ‘twin-peak’ form. So far there has been few fully developed economic explanation.
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