Productivity Convergence : Is Anyone Catching Up?
Labor productivity in EMDEs is just under one-fifth of the advanced economy average, while in LICs, it is just 2 percent. Average productivity growth in EMDEs has picked up rapidly since 2000, renewing interest in the convergence hypothesis, which...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/770631599049513984/Productivity-Convergence-Is-Anyone-Catching-Up http://hdl.handle.net/10986/34425 |
| Summary: | Labor productivity in EMDEs is just
under one-fifth of the advanced economy average, while in
LICs, it is just 2 percent. Average productivity growth in
EMDEs has picked up rapidly since 2000, renewing interest in
the convergence hypothesis, which predicts that economies
with low productivity should close productivity gaps over
time. However, the average rate of convergence remains low,
with current growth differentials halving the productivity
gap only after over 100 years. Behind the low average pace
of convergence lies considerable diversity among groups of
countries converging toward different productivity levels
(convergence clubs). Many EMDEs have moved into higher-level
productivity convergence clubs since 2000, with 16 joining
the highest club, primarily consisting of advanced
economies. These transitioning EMDEs have been characterized
by systematically better initial education levels, greater
institutional quality, and high or deepening economic
complexity relative to their income level, frequently aided
by policies to encourage participation in global value
chains. Countries seeking to replicate successes, or
continue along rapid convergence paths, face a range of
headwinds, including a more challenging environment to gain
market share in manufacturing production or to increase
global value chain integration. |
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