An Alternative View of the Convergence Issue of Growth Empirics

Abstract

In this paper we study the dynamics of economic growth for 140 countries during the period 1951-2003. The variables representing economic performance are levels and growth rates of per capita GDP. Using the concept of economic regime, we introduce a notion of distance between the dynamical paths of different countries. Then, a Minimal Spanning Tree and a Hierarchical Tree are constructed from time series to help detecting the existence of groups of countries sharing similar economic performance. The two main clusters that are identified over the whole time interval, can be interpreted as two groups of countries with high and low performance, respectively. The evolution of such clusters shows three main stylized facts: certain countries move across clusters; the high performance cluster tends to span, while the low performance one tends to be (more) compact; the distance between the two groups increases in time.