Introduction
The long term economic growth can be defined as the total market value of the total production
by an economy over the long period of time. There is no definitive time period to define the long
period. As famously said by Keyns “we are all dead”. In the long run, one of the most discussed
topic is the convergence of the economies. It is argued that the poor countries will grow faster
than the rich countries as the economic growth of the rich countries will grow at slow pace as
compared to the poor countries. Many scholars have argued that over a period of time, the poor
countries will be able to catch up with the rich countries. However for this to happen there are
certain conditions which needs to be fulfilled(Barro & Sala-i-Martin, 1992).
There are two type of convergence. The first one is the unconditional convergence, which states
that the poor countries will grow at a faster pace and in the long run, the per capita income or the
standard of living will be similar as the now developed countries. The second type of
convergence is the conditional convergence which states that the convergence of the poorer
countries will happen with the countries which have similar characteristics In other words,
convergence will not happen between all the poor and rich countries. There will be more than
one convergence points(Barro & Sala-i-Martin, 1992; Sarkar, 1997).
Background
The secondary data for the analysis has been extracted from the World Bank data base and GDP
per capita was used as the indicator of the growth(The World Bank Group, 2016).
Summary statistics of the all the countries included in the data set is given in the tables below.
Summary Statistics
1960
Summary Statistics, using the observations 1 - 226
for the variable GDP_1960 (107 valid observations)
Mean Median Minimum Maximum
492.51 241.56 40.537 3007.1
Std. Dev. C.V. Skewness Ex. kurtosis
610.40 1.2394 1.9628 3.3347
5% Perc. 95% Perc. IQ range Missing obs.
60.061 1950.8 396.45 119
1990

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Long Term Economic Growth and Convergence

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