economic convergence thesis

The Convergence Hypothesis: History, Theory, and Evidence

Published: January 1998
Volume 9 , pages 85–105, ( 1998 )

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Farhad Rassekh 1

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The hypothesis that per capita output converges across economies over time represents one of the oldest controversies in economics. This essay surveys the history and development of the hypothesis, focusing particularly on its vast literature since the mid-1980s. A summary of empirical analyses, econometric issues, and various tests of the convergence hypothesis are also presented. Moreover, the essay analyzes the implications of the hypothesis for economic growth, especially as it relates to underdeveloped economies.

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Rassekh, F. The Convergence Hypothesis: History, Theory, and Evidence. Open Economies Review 9 , 85–105 (1998). https://doi.org/10.1023/A:1008279323832

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Issue Date : January 1998

DOI : https://doi.org/10.1023/A:1008279323832

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Chapter 20. Economic Growth

20.4 Economic Convergence

Learning objectives.

Explain economic convergence
Analyze various arguments for and against economic convergence
Evaluate the speed of economic convergence between high-income countries and the rest of the world

Some low-income and middle-income economies around the world have shown a pattern of convergence , in which their economies grow faster than those of high-income countries. GDP increased by an average rate of 2.7% per year in the 1990s and 2.3% per year from 2000 to 2008 in the high-income countries of the world, which include the United States, Canada, the countries of the European Union, Japan, Australia, and New Zealand.

Table 5 lists 10 countries of the world that belong to an informal “fast growth club.” These countries averaged GDP growth (after adjusting for inflation) of at least 5% per year in both the time periods from 1990 to 2000 and from 2000 to 2008. Since economic growth in these countries has exceeded the average of the world’s high-income economies, these countries may converge with the high-income countries. The second part of Table 5 lists the “slow growth club,” which consists of countries that averaged GDP growth of 2% per year or less (after adjusting for inflation) during the same time periods. The final portion of Table 5 shows GDP growth rates for the countries of the world divided by income.

Each of the countries in Table 5 has its own unique story of investments in human and physical capital, technological gains, market forces, government policies, and even lucky events, but an overall pattern of convergence is clear. The low-income countries have GDP growth that is faster than that of the middle-income countries, which in turn have GDP growth that is faster than that of the high-income countries. Two prominent members of the fast-growth club are China and India, which between them have nearly 40% of the world’s population. Some prominent members of the slow-growth club are high-income countries like the United States, France, Germany, Italy, and Japan.

Will this pattern of economic convergence persist into the future? This is a controversial question among economists that we will consider by looking at some of the main arguments on both sides.

Arguments Favoring Convergence

Several arguments suggest that low-income countries might have an advantage in achieving greater worker productivity and economic growth in the future.

A first argument is based on diminishing marginal returns. Even though deepening human and physical capital will tend to increase GDP per capita, the law of diminishing returns suggests that as an economy continues to increase its human and physical capital, the marginal gains to economic growth will diminish. For example, raising the average education level of the population by two years from a tenth-grade level to a high school diploma (while holding all other inputs constant) would produce a certain increase in output. An additional two-year increase, so that the average person had a two-year college degree, would increase output further, but the marginal gain would be smaller. Yet another additional two-year increase in the level of education, so that the average person would have a four-year-college bachelor’s degree, would increase output still further, but the marginal increase would again be smaller. A similar lesson holds for physical capital. If the quantity of physical capital available to the average worker increases, by, say, $5,000 to $10,000 (again, while holding all other inputs constant), it will increase the level of output. An additional increase from $10,000 to $15,000 will increase output further, but the marginal increase will be smaller.

Low-income countries like China and India tend to have lower levels of human capital and physical capital, so an investment in capital deepening should have a larger marginal effect in these countries than in high-income countries, where levels of human and physical capital are already relatively high. Diminishing returns implies that low-income economies could converge to the levels achieved by the high-income countries.

A second argument is that low-income countries may find it easier to improve their technologies than high-income countries. High-income countries must continually invent new technologies, whereas low-income countries can often find ways of applying technology that has already been invented and is well understood. The economist Alexander Gerschenkron (1904–1978) gave this phenomenon a memorable name: “the advantages of backwardness.” Of course, he did not literally mean that it is an advantage to have a lower standard of living. He was pointing out that a country that is behind has some extra potential for catching up.

Finally, optimists argue that many countries have observed the experience of those that have grown more quickly and have learned from it. Moreover, once the people of a country begin to enjoy the benefits of a higher standard of living, they may be more likely to build and support the market-friendly institutions that will help provide this standard of living.

View this video to learn about economic growth across the world.

Arguments That Convergence Is neither Inevitable nor Likely

If the growth of an economy depended only on the deepening of human capital and physical capital, then the growth rate of that economy would be expected to slow down over the long run because of diminishing marginal returns. However, there is another crucial factor in the aggregate production function: technology.

The development of new technology can provide a way for an economy to sidestep the diminishing marginal returns of capital deepening. Figure 1 shows how. The horizontal axis of the figure measures the amount of capital deepening, which on this figure is an overall measure that includes deepening of both physical and human capital. The amount of human and physical capital per worker increases as you move from left to right, from C 1 to C 2 to C 3 . The vertical axis of the diagram measures per capita output. Start by considering the lowest line in this diagram, labeled Technology 1. Along this aggregate production function, the level of technology is being held constant, so the line shows only the relationship between capital deepening and output. As capital deepens from C 1 to C 2 to C 3 and the economy moves from R to U to W, per capita output does increase—but the way in which the line starts out steeper on the left but then flattens as it moves to the right shows the diminishing marginal returns, as additional marginal amounts of capital deepening increase output by ever-smaller amounts. The shape of the aggregate production line (Technology 1) shows that the ability of capital deepening, by itself, to generate sustained economic growth is limited, since diminishing returns will eventually set in.

The graph shows three upward arching lines that each represent a different technology. Improvements in technology lead to greater output per capita and deepened physical and human capital.

Now, bring improvements in technology into the picture. Improved technology means that with a given set of inputs, more output is possible. The production function labeled Technology 1 in the figure is based on one level of technology, but Technology 2 is based on an improved level of technology, so for every level of capital deepening on the horizontal axis, it produces a higher level of output on the vertical axis. In turn, production function Technology 3 represents a still higher level of technology, so that for every level of inputs on the horizontal axis, it produces a higher level of output on the vertical axis than either of the other two aggregate production functions.

Most healthy, growing economies are deepening their human and physical capital and increasing technology at the same time. As a result, the economy can move from a choice like point R on the Technology 1 aggregate production line to a point like S on Technology 2 and a point like T on the still higher aggregate production line (Technology 3). With the combination of technology and capital deepening, the rise in GDP per capita in high-income countries does not need to fade away because of diminishing returns. The gains from technology can offset the diminishing returns involved with capital deepening.

Will technological improvements themselves run into diminishing returns over time? That is, will it become continually harder and more costly to discover new technological improvements? Perhaps someday, but, at least over the last two centuries since the Industrial Revolution, improvements in technology have not run into diminishing marginal returns. Modern inventions, like the Internet or discoveries in genetics or materials science, do not seem to provide smaller gains to output than earlier inventions like the steam engine or the railroad. One reason that technological ideas do not seem to run into diminishing returns is that the ideas of new technology can often be widely applied at a marginal cost that is very low or even zero. A specific additional machine, or an additional year of education, must be used by a specific worker or group of workers. A new technology or invention can be used by many workers across the economy at very low marginal cost.

The argument that it is easier for a low-income country to copy and adapt existing technology than it is for a high-income country to invent new technology is not necessarily true, either. When it comes to adapting and using new technology, a society’s performance is not necessarily guaranteed, but is the result of whether the economic, educational, and public policy institutions of the country are supportive. In theory, perhaps, low-income countries have many opportunities to copy and adapt technology, but if they lack the appropriate supportive economic infrastructure and institutions, the theoretical possibility that backwardness might have certain advantages is of little practical relevance.

Visit this website to read more about economic growth in India.

The Slowness of Convergence

Although economic convergence between the high-income countries and the rest of the world seems possible and even likely, it will proceed slowly. Consider, for example, a country that starts off with a GDP per capita of $40,000, which would roughly represent a typical high-income country today, and another country that starts out at $4,000, which is roughly the level in low-income but not impoverished countries like Indonesia, Guatemala, or Egypt. Say that the rich country chugs along at a 2% annual growth rate of GDP per capita, while the poorer country grows at the aggressive rate of 7% per year. After 30 years, GDP per capita in the rich country will be $72,450 (that is, $40,000 (1 + 0.02) 30 ) while in the poor country it will be $30,450 (that is, $4,000 (1 + 0.07) 30 ). Convergence has occurred; the rich country used to be 10 times as wealthy as the poor one, and now it is only about 2.4 times as wealthy. Even after 30 consecutive years of very rapid growth, however, people in the low-income country are still likely to feel quite poor compared to people in the rich country. Moreover, as the poor country catches up, its opportunities for catch-up growth are reduced, and its growth rate may slow down somewhat.

The slowness of convergence illustrates again that small differences in annual rates of economic growth become huge differences over time. The high-income countries have been building up their advantage in standard of living over decades—more than a century in some cases. Even in an optimistic scenario, it will take decades for the low-income countries of the world to catch up significantly.

Calories and Economic Growth

The story of modern economic growth can be told by looking at calorie consumption over time. The dramatic rise in incomes allowed the average person to eat better and consume more calories. How did these incomes increase? The neoclassical growth consensus uses the aggregate production function to suggest that the period of modern economic growth came about because of increases in inputs such as technology and physical and human capital. Also important was the way in which technological progress combined with physical and human capital deepening to create growth and convergence. The issue of distribution of income notwithstanding, it is clear that the average worker can afford more calories in 2014 than in 1875.

Aside from increases in income, there is another reason why the average person can afford more food. Modern agriculture has allowed many countries to produce more food than they need. Despite having more than enough food, however, many governments and multilateral agencies have not solved the food distribution problem. In fact, food shortages, famine, or general food insecurity are caused more often by the failure of government macroeconomic policy, according to the Nobel Prize-winning economist Amartya Sen. Sen has conducted extensive research into issues of inequality, poverty, and the role of government in improving standards of living. Macroeconomic policies that strive toward stable inflation, full employment, education of women, and preservation of property rights are more likely to eliminate starvation and provide for a more even distribution of food.

Because we have more food per capita, global food prices have decreased since 1875. The prices of some foods, however, have decreased more than the prices of others. For example, researchers from the University of Washington have shown that in the United States, calories from zucchini and lettuce are 100 times more expensive than calories from oil, butter, and sugar. Research from countries like India, China, and the United States suggests that as incomes rise, individuals want more calories from fats and protein and fewer from carbohydrates. This has very interesting implications for global food production, obesity, and environmental consequences. Affluent urban India has an obesity problem much like many parts of the United States. The forces of convergence are at work.

Key Concepts and Summary

When countries with lower levels of GDP per capita catch up to countries with higher levels of GDP per capita, the process is called convergence. Convergence can occur even when both high- and low-income countries increase investment in physical and human capital with the objective of growing GDP. This is because the impact of new investment in physical and human capital on a low-income country may result in huge gains as new skills or equipment are combined with the labor force. In higher-income countries, however, a level of investment equal to that of the low income country is not likely to have as big an impact, because the more developed country most likely has high levels of capital investment. Therefore, the marginal gain from this additional investment tends to be successively less and less. Higher income countries are more likely to have diminishing returns to their investments and must continually invent new technologies; this allows lower-income economies to have a chance for convergent growth. However, many high-income economies have developed economic and political institutions that provide a healthy economic climate for an ongoing stream of technological innovations. Continuous technological innovation can counterbalance diminishing returns to investments in human and physical capital.

Self-Check Questions

Use an example to explain why, after periods of rapid growth, a low-income country that has not caught up to a high-income country may feel poor.
A weak economy in which businesses become reluctant to make long-term investments in physical capital.
A rise in international trade.
A trend in which many more adults participate in continuing education courses through their employers and at colleges and universities.
What are the “advantages of backwardness” for economic growth?
Would you expect capital deepening to result in diminished returns? Why or why not? Would you expect improvements in technology to result in diminished returns? Why or why not?
Why does productivity growth in high-income economies not slow down as it runs into diminishing returns from additional investments in physical capital and human capital? Does this show one area where the theory of diminishing returns fails to apply? Why or why not?

Review Questions

For a high-income economy like the United States, what elements of the aggregate production function are most important in bringing about growth in GDP per capita? What about a middle-income country such as Brazil? A low-income country such as Niger?
List some arguments for and against the likelihood of convergence.

Critical Thinking Questions

What sorts of policies can governments implement to encourage convergence?
As technological change makes us more sedentary and food costs increase, obesity is likely. What factors do you think may limit obesity?

Central Intelligence Agency. “The World Factbook: Country Comparison: GDP–Real Growth Rate.” https://www.cia.gov/library/publications/the-world-factbook/rankorder/2003rank.html.

Sen, Amartya. “Hunger in the Contemporary World (Discussion Paper DEDPS/8).” The Suntory Centre: London School of Economics and Political Science . Last modified November 1997. http://sticerd.lse.ac.uk/dps/de/dedps8.pdf.

Answers to Self-Check Questions

A good way to think about this is how a runner who has fallen behind in a race feels psychologically and physically as he catches up. Playing catch-up can be more taxing than maintaining one’s position at the head of the pack.
No. Capital deepening refers to an increase in the amount of capital per person in an economy. A decrease in investment by firms will actually cause the opposite of capital deepening (since the population will grow over time).
There is no direct connection between and increase in international trade and capital deepening. One could imagine particular scenarios where trade could lead to capital deepening (for example, if international capital inflows which are the counterpart to increasing the trade deficit) lead to an increase in physical capital investment), but in general, no.
Yes. Capital deepening refers to an increase in either physical capital or human capital per person. Continuing education or any time of lifelong learning adds to human capital and thus creates capital deepening.
The advantages of backwardness include faster growth rates because of the process of convergence, as well as the ability to adopt new technologies that were developed first in the “leader” countries. While being “backward” is not inherently a good thing, Gerschenkron stressed that there are certain advantages which aid countries trying to “catch up.”
Capital deepening, by definition, should lead to diminished returns because you’re investing more and more but using the same methods of production, leading to the marginal productivity declining. This is shown on a production function as a movement along the curve. Improvements in technology should not lead to diminished returns because you are finding new and more efficient ways of using the same amount of capital. This can be illustrated as a shift upward of the production function curve.
Productivity growth from new advances in technology will not slow because the new methods of production will be adopted relatively quickly and easily, at very low marginal cost. Also, countries that are seeing technology growth usually have a vast and powerful set of institutions for training workers and building better machines, which allows the maximum amount of people to benefit from the new technology. These factors have the added effect of making additional technological advances even easier for these countries.

20.4 Economic Convergence

Learning objectives.

By the end of this section, you will be able to:

Explain economic convergence
Analyze various arguments for and against economic convergence
Evaluate the speed of economic convergence between high-income countries and the rest of the world

Some low-income and middle-income economies around the world have shown a pattern of convergence , in which their economies grow faster than those of high-income countries. GDP increased by an average rate of 2.7% per year in the 1990s and 1.7% per year from 2010 to 2019 in the high-income countries of the world, which include the United States, Canada, the European Union countries, Japan, Australia, and New Zealand.

Table 20.5 lists eight countries that belong to an informal “fast growth club.” These countries averaged GDP growth (after adjusting for inflation) of at least 5% per year in both the time periods from 1990 to 2000 and from 2010 to 2019. Since economic growth in these countries has exceeded the average of the world’s high-income economies, these countries may converge with the high-income countries. The second part of Table 20.5 lists the “slow growth club,” which consists of countries that averaged GDP growth of 2% per year or less (after adjusting for inflation) during the same time periods. The final portion of Table 20.5 shows GDP growth rates for the countries of the world divided by income. (Note that the reason there is no data for 2001–2009 is because of the Great Recession, which lasted from 2007–2009. Many country’s GDP shrank during these years.)

Each of the countries in Table 20.5 has its own unique story of investments in human and physical capital, technological gains, market forces, government policies, and even lucky events, but an overall pattern of convergence is clear. The low-income countries have GDP growth that is faster than that of the middle-income countries, which in turn have GDP growth that is faster than that of the high-income countries. Two prominent members of the fast-growth club are China and India, which between them have nearly 40% of the world’s population. Some prominent members of the slow-growth club are high-income countries like France, Germany, Italy, and Japan.

Will this pattern of economic convergence persist into the future? This is a controversial question among economists that we will consider by looking at some of the main arguments on both sides.

Arguments Favoring Convergence

Several arguments suggest that low-income countries might have an advantage in achieving greater worker productivity and economic growth in the future.

View this video to learn about economic growth across the world.

Arguments That Convergence Is neither Inevitable nor Likely

If the economy's growth depended only on the deepening of human capital and physical capital, then we would expect that economy's growth rate to slow down over the long run because of diminishing marginal returns. However, there is another crucial factor in the aggregate production function: technology.

Developing new technology can provide a way for an economy to sidestep the diminishing marginal returns of capital deepening. Figure 20.7 shows how. The figure's horizontal axis measures the amount of capital deepening, which on this figure is an overall measure that includes deepening of both physical and human capital. The amount of human and physical capital per worker increases as you move from left to right, from C 1 to C 2 to C 3 . The diagram's vertical axis measures per capita output. Start by considering the lowest line in this diagram, labeled Technology 1. Along this aggregate production function, the level of technology is held constant, so the line shows only the relationship between capital deepening and output. As capital deepens from C 1 to C 2 to C 3 and the economy moves from R to U to W, per capita output does increase—but the way in which the line starts out steeper on the left but then flattens as it moves to the right shows the diminishing marginal returns, as additional marginal amounts of capital deepening increase output by ever-smaller amounts. The shape of the aggregate production line (Technology 1) shows that the ability of capital deepening, by itself, to generate sustained economic growth is limited, since diminishing returns will eventually set in.

Will technological improvements themselves run into diminishing returns over time? That is, will it become continually harder and more costly to discover new technological improvements? Perhaps someday, but, at least over the last two centuries since the beginning of the Industrial Revolution, improvements in technology have not run into diminishing marginal returns. Modern inventions, like the internet or discoveries in genetics or materials science, do not seem to provide smaller gains to output than earlier inventions like the steam engine or the railroad. One reason that technological ideas do not seem to run into diminishing returns is that we often can apply widely the ideas of new technology at a marginal cost that is very low or even zero. A specific worker or group of workers must use a specific additional machine, or an additional year of education. Many workers across the economy can use a new technology or invention at very low marginal cost.

The argument that it is easier for a low-income country to copy and adapt existing technology than it is for a high-income country to invent new technology is not necessarily true, either. When it comes to adapting and using new technology, a society’s performance is not necessarily guaranteed, but is the result of whether the country's economic, educational, and public policy institutions are supportive. In theory, perhaps, low-income countries have many opportunities to copy and adapt technology, but if they lack the appropriate supportive economic infrastructure and institutions, the theoretical possibility that backwardness might have certain advantages is of little practical relevance.

Visit this website to read more about economic growth in India.

The Slowness of Convergence

Although economic convergence between the high-income countries and the rest of the world seems possible and even likely, it will proceed slowly. Consider, for example, a country that starts off with a GDP per capita of $40,000, which would roughly represent a typical high-income country today, and another country that starts out at $4,000, which is roughly the level in low-income but not impoverished countries like Indonesia, Guatemala, or Egypt. Say that the rich country chugs along at a 2% annual growth rate of GDP per capita, while the poorer country grows at the aggressive rate of 7% per year. After 30 years, GDP per capita in the rich country will be $72,450 (that is, $40,000 (1 + 0.02) 30 ) while in the poor country it will be $30,450 (that is, $4,000 (1 + 0.07) 30 ). Convergence has occurred. The rich country used to be 10 times as wealthy as the poor one, and now it is only about 2.4 times as wealthy. Even after 30 consecutive years of very rapid growth, however, people in the low-income country are still likely to feel quite poor compared to people in the rich country. Moreover, as the poor country catches up, its opportunities for catch-up growth are reduced, and its growth rate may slow down somewhat.

Bring It Home

Calories and economic growth.

We can tell the story of modern economic growth by looking at calorie consumption over time. The dramatic rise in incomes allowed the average person to eat better and consume more calories. How did these incomes increase? The neoclassical growth consensus uses the aggregate production function to suggest that the period of modern economic growth came about because of increases in inputs such as technology and physical and human capital. Also important was the way in which technological progress combined with physical and human capital deepening to create growth and convergence. The issue of distribution of income notwithstanding, it is clear that the average worker can afford more calories in 2020 than in 1875.

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What Is Convergence Theory?

How Industrialization Affects Developing Nations

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Key Concepts
Major Sociologists
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Recommended Reading
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Convergence theory presumes that as nations move from the early stages of industrialization toward becoming fully industrialized , they begin to resemble other industrialized societies in terms of societal norms and technology.

The characteristics of these nations effectively converge. Ultimately, this could lead to a unified global culture if nothing impeded the process.

Convergence theory has its roots in the functionalist perspective of economics which assumes that societies have certain requirements that must be met if they are to survive and operate effectively.

Convergence theory became popular in the 1960s when it was formulated by the University of California, Berkeley Professor of Economics Clark Kerr.

Some theorists have since expounded upon Kerr's original premise. They say industrialized nations may become more alike in some ways than in others.

Convergence theory is not an across-the-board transformation. Although technologies may be shared , it's not as likely that more fundamental aspects of life such as religion and politics would necessarily converge—though they may.

Convergence vs. Divergence

Convergence theory is also sometimes referred to as the "catch-up effect."

When technology is introduced to nations still in the early stages of industrialization, money from other nations may pour in to develop and take advantage of this opportunity. These nations may become more accessible and susceptible to international markets. This allows them to "catch up" with more advanced nations.

If capital is not invested in these countries, however, and if international markets do not take notice or find that opportunity is viable there, no catch-up can occur. The country is then said to have diverged rather than converged.

Unstable nations are more likely to diverge because they are unable to converge due to political or social-structural factors, such as lack of educational or job-training resources. Convergence theory, therefore, would not apply to them.

Convergence theory also allows that the economies of developing nations will grow more rapidly than those of industrialized countries under these circumstances. Therefore, all should reach an equal footing eventually.

Some examples of convergence theory include Russia and Vietnam, formerly purely communist countries that have eased away from strict communist doctrines as the economies in other countries, such as the United States, have burgeoned.

State-controlled socialism is less the norm in these countries now than is market socialism, which allows for economic fluctuations and, in some cases, private businesses as well. Russia and Vietnam have both experienced economic growth as their socialistic rules and politics have changed and relaxed to some degree.

Former World War II Axis nations including Italy, Germany, and Japan rebuilt their economic bases into economies not dissimilar to those that existed among the Allied Powers of the United States, the Soviet Union, and Great Britain.

More recently, in the mid-20th century, some East Asian countries converged with other more developed nations. Singapore , South Korea, and Taiwan are now all considered to be developed, industrialized nations.

Sociological Critiques

Convergence theory is an economic theory that presupposes that the concept of development is

a universally good thing
defined by economic growth.

It frames convergence with supposedly "developed" nations as a goal of so-called "undeveloped" or "developing" nations, and in doing so, fails to account for the numerous negative outcomes that often follow this economically-focused model of development.

Many sociologists, postcolonial scholars, and environmental scientists have observed that this type of development often only further enriches the already wealthy, and/or creates or expands a middle class while exacerbating the poverty and poor quality of life experienced by the majority of the nation in question.

Additionally, it is a form of development that typically relies on the over-use of natural resources, displaces subsistence and small-scale agriculture, and causes widespread pollution and damage to the natural habitat.

Rostow's Stages of Growth Development Model
A List of Current Communist Countries in the World
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The Critical View on Global Capitalism
Essential Economics Terms: Kuznets Curve
The History of Singapore's Economic Development
What Was the Domino Theory?
All About Marxist Sociology
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The Three Historic Phases of Capitalism and How They Differ
American Economy of the 1990s and Beyond
Good Reasons to Study Economics
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Economic convergence in the European Union

Convergence is a very debatable topic in all growth literature. In different kinds of literature, the authors try to find evidence about the existence of economic convergence. This master's thesis tries to find evidence for economic convergence across the European Union countries from 1995 up to 2018. Moreover, the concepts of sigma-convergence and beta-convergence are discussed. To find evidence of economic convergence, the methodology proposed by Phillips & Sul is used. In addition, the well-known and debatable method from the 90s, proposed by Barro & Sala-i-Martin about the beta-convergence is briefly explained. While discussing the method of Barro & Sala-i-Martin, the reasons are explained why according to Phillips & Sul, this proposed method is not recommended to be used. This master's thesis is organized into the following sections. The first section consists of an introduction, where the idea of convergence is explained in more detail and why according to Phillips & S...

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The main scope of this survey is to explain the differences between,three main approaches which,attempt to explain ,the convergence ,or divergence ,pattern in per ,capita income ,or productivity level, among different economies. In section 1 three main theoretical approaches are brought together to explain,the convergence,phenomenon:,the neo-classical approach of unconditional convergence, the “endogenous growth” theory of conditional convergence, and the demand orientated approach of cumulative growth, which predicts divergence as the most probable outcome. Section 2 explains the sources of unconditionalconvergence,in the light of the empirical evidence that gives support to this result. Section 3 analyses the sources of conditional convergence,making,reference to the empirical studies which identify the main conditioning factors which ,lead to convergence. ,Section 4 evaluates ,the relevance and explains the limitations of the conventional approaches to convergence. Section 5 desc...

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The paper aims to assess the growth (income level) and cyclical convergence among 8 CEE countries entering the EU: Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovak Republic, and Slovenia, as well as their convergence to the EU. Income convergence is analysed in terms of beta and sigma convergence in the framework of the Solow model of the economic growth.

Fernando Alonso Guinea

This paper analyses the process of real convergence of the economies in the enlarged European Union from 1995 to 2009. Using GDP per capita, it can be shown that there have been significant advances in beta-type convergence, but that these have not been homogenous, either between countries or over the time period examined. Part of this convergence arises because of the statistical effect produced by the weak growth in the large economies and by the migratory flows. This convergence has stalled, or even reversed, over the last two years (2008–2009), although this trend started to become evident even before the recession began. Continued convergence currently depends on some factors that are hindering the economic recovery.

Economic Analysis

Mihaela Simionescu

The objective of this research is to analyze the differences between Romania and the European Union regarding the convergence process. In this paper we were interested in determining the forecasting horizon for which Romania, in certain conditions, might have a value of GDP per capita that is closer to the average of EU (25 countries) and we obtained that 18 years are necessary for Romania to achieve the convergence compared to EU average of GDP per capita. The co-integration approach suggested that in the last 15 years there is a divergence of the Romania economic growth and the EU-25 average. This research might be developed by taking into account other measures of economic convergence.

Hitotsubashi Journal of Economics

This paper presents the analysis of sigma (σ) and beta (β) convergences of per capita GDP among the 10 European countries which accessed the European Union in 2004. Our results confirm the existence of both types of convergence in the second half of the 1990s and the 2000s. Generally, the poorer and new EU member states grew faster than the richer new EU member states. As a result, the income gap between these two groups of countries has narrowed although it still remains quite large. The convergence occurred at the rate of 4.2% during the period 1992-2006 and 7.0% and 9.6% during the sub periods 1995-2006 and 2002-2006, respectively.

Journal of Central Banking Theory and Practice

Daniela Bobeva

Despite the significant academic interest in the economic cohesion, the various aspects of convergence and the ways they can be measured still remain theoretically unclear. These are issues of extreme political significance, especially for countries aspiring for EU and euro area membership. The goal of this paper is to consolidate a variety of theoretical views on the convergence and its measurement and use it as the basis to assess the progress and the current state of economic convergence to the EU of the four candidate countries. The interrelation between the three forms of convergence in the different phases of the economic cycle is studied and the slobs in the ways the convergence is measured are outlined. The study reveals large differences between the candidate countries in achieving convergence with the EU. Their experiences do not confirm the positive relationship between nominal and real convergence. The structural convergence considered as convergence of sectoral structur...

Nicholas Apergis

Abstract In this paper, we explore convergence of real per capita output across the European Union (EU) countries, as well as the transitional behavior of possible underlying factors that are responsible for any convergence or divergence pattern. The new panel convergence methodology developed by Phillips and Sul (2007) is employed in a production function growth accounting approach and data from the Total Economy Database and the Total Economy Growth Accounting Database.

The paper aims to assess the real economic convergence among eight CEE countries that accessed the EU, as well as their convergence with the EU. Two aspects of convergence are analysed: (a) income convergence as a tendency to close the income gap; (b) cyclical convergence as a tendency to the conformity of business cycles. Income convergence is analysed in terms

Three essays on economic growth, convergence, and financial deepening

This thesis comprises three essays that contribute to the empirics of economic growth literature.

The first essay explores labor productivity growth and convergence in manufacturing. It aims to analyze the underlying forces behind the observed unconditional convergence in labor productivity in the manufacturing sector across countries. The findings suggest that labor productivity growth is mainly driven by capital accumulation and, to a lesser extent, technological progress. Capital accumulation is the main driver of the observed unconditional convergence, whereas technological change contributes to divergence rather than convergence.

The second essay investigates the effect of credit creation on real value-added in manufacturing, services, and agriculture, and whether the effect is conditional on the level of development (the saturation effect). Using recent advances in panel time-series methods and a sample of up to 95 countries covering the period 1970 to 2017, we find that private credit has strong positive effects on manufacturing and services value-added, but not on agriculture. We also find evidence of credit saturation across all three sectors, albeit the effect is noticeably weaker in agriculture.

The third essay revisits the empirical evidence of cross-country income convergence. Our results confirm the emergence of unconditional convergence in income starting from the mid-1990s, and show that such a pattern of cross-country growth is a new phenomenon. Technological catch-up and capital accumulation are the main drivers of the observed convergence during the period spanning 1995–2019. We also look at the contribution to convergence of the manufacturing, services, and agricultural sectors. It seems that none of these sectors were growing faster in poorer countries throughout the 1970–1995 period, which translates to a lack of income convergence. In 1995–2019, i.e., the period of the observed unconditional convergence, all of the above-mentioned sectors were growing faster in poorer countries relative to rich countries.

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Kane, Timothy Joseph. "The convergence of nations : three papers on international growth /." Diss., Connect to a 24 p. preview or request complete full text in PDF format. Access restricted to UC campuses, 2001. http://wwwlib.umi.com/cr/ucsd/fullcit?p3022199.

Andersson, Guadalupe. "Determinants of economic growth across Sweden : An analysis of exogenous and endogenous economic growth and convergence." Thesis, Örebro universitet, Handelshögskolan vid Örebro Universitet, 2021. http://urn.kb.se/resolve?urn=urn:nbn:se:oru:diva-89291.

The purpose of this study is to examine the exogenous and endogenous growth theories in order to determine the factors that generate economic growth across the Swedish national areas during2000-2016. This analysis is made through the estimation of the Solow model, the augmented Solow model and the Romer model using the econometric methods fixed effects and random effects. Moreover, a convergence analysis across these Swedish regions is presented in this research, which is carried out using a random effects model. The results indicate that investment explains 94 percent of the variation in regional income per capita when random effects and regional time trends are taken into account. This finding suggests that investment is the determinant of economic growth in the short run, which is consistent with the predictions of the Solow model and the exogenous growth theory. Furthermore, the estimation of the Romer model yields misleading results, which are not consistent with the predictions of the endogenous growth theory. Nevertheless, the fact that the available dataset to study the Romer model is limited due to the difficulty of finding Swedish R&D data and the assumption that R&D is undertaken in the main offices of the firms typically situated in Stockholm, while the R&Dspillovers are used in production facilities in other regions of Sweden may be responsible for obtaining such inaccurate results. Additionally, the study of convergence reports that there is conditional convergence across the Swedish national areas during 2000-2016. This indicates that the differences in income per capita across these regions have decreased during the analysed period.

Asteriou, Dimitrios. "Essays on economic growth : convergence, financial development, education and uncertainty." Thesis, City University London, 2000. http://openaccess.city.ac.uk/8056/.

Crespo, Cuaresma Jesus, Stephan Klasen, and Konstantin M. Wacker. "There is poverty convergence." WU Vienna University of Economics and Business, 2016. http://epub.wu.ac.at/4807/1/wp213.pdf.

Cancado, Luciana P. "Economic Growth: Panel Data Evidence from Latin America." Ohio University / OhioLINK, 2005. http://rave.ohiolink.edu/etdc/view?acc_num=ohiou1127143858.

Zhang, Zongyi. "Economic performance and regional growth in China 1952-1999." Thesis, University of Portsmouth, 2001. http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.369419.

Baafi, Antwi Joseph. "Ghana's Economic Growth in Perspective : A time series approach to Convergence and Determinants." Thesis, Södertörn University College, School of Social Sciences, 2010. http://urn.kb.se/resolve?urn=urn:nbn:se:sh:diva-3643.

Economic growth around the world has not been equal for a long time. Some economics grow faster while others grow slower. But economists have predicted that the slower growing economics will eventually converge with the faster growing economy as some point in the future. This is known as the convergence hypothesis. In this study, we test this hypothesis for Ghana and the Western Europeans countries with UK been a proxy for these countries, using time series data to determine whether or not it holds. We determine how fast or slow this convergence process is by using the returns to scale concept on Ghana’s economy and latter account for factor that determines economic growth in sectors. The study supported the null hypothesis of convergence i.e. Ghana is catching up with the Western European countries. The study also shown that Ghana growth accounting exhibit decreasing returns meaning convergence is relatively slow and also signifies that Ghana is not on a balanced growth path (this refers to the simultaneous, coordinated expansion of several sectors of the economy). The study showed a negative relationship between GDP and labour both in the long run and short run relationship. Again the study showed a positive relationship between GDP and capital, Agric and Industrial sector. Lastly, the study showed a negative relationship between GDP and AID and Service in the long run and positive relationship in the short run.

Johnson, Katherine. "The Role of Islamic Banking in Economic Growth." Scholarship @ Claremont, 2013. http://scholarship.claremont.edu/cmc_theses/642.

Kim, Hak-Hoon. "Economic convergence and urban growth: Structural changes in the Arizona urban system." Diss., The University of Arizona, 1993. http://hdl.handle.net/10150/186196.

Ritzmann, Derek. "Economic growth, convergence, and disparities in productivity : a world production frontier approach." Thesis, University of Oxford, 2007. http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.670135.

Thomas, Barry van Someren. "Growth and regional economic development in the European Union : an empirical study." Thesis, University of Birmingham, 1998. http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.314117.

Chen, Hong. "Convergence, productivity and industrial growth in China during the reform era." Thesis, University of Birmingham, 2009. http://etheses.bham.ac.uk//id/eprint/271/.

Sha, Ran. "The determinants of national and provincial economic growth in China / Sha Ran." Thesis, North-West University, 2005. http://hdl.handle.net/10394/1171.

Hachichou, Julia Maria. "How has technical progress contributed to the economic development of countries? - Are these countries converging or diverging away from each other, economically? : Global economic growth: A study on how technical progress contributes to economic growth." Thesis, Södertörns högskola, Nationalekonomi, 2018. http://urn.kb.se/resolve?urn=urn:nbn:se:sh:diva-36286.

Rasmidatta, Pinchawee. "The Relationship Between Domestic Saving and Economic Growth and Convergence Hypothesis : Case Study of Thailand." Thesis, Södertörns högskola, Institutionen för samhällsvetenskaper, 2011. http://urn.kb.se/resolve?urn=urn:nbn:se:sh:diva-9451.

Yao, Yudong. "Provincial income convergence, international trade and long run economic growth in China 1978-1997 : a panel data approach." Thesis, University of Cambridge, 2000. http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.248719.

Smith, Joel Benjamin Edmund. "Economic growth, convergence and the HIV/AIDS epidemic : a cross-country panel data analysis." Thesis, University of Edinburgh, 2011. http://hdl.handle.net/1842/5699.

Long, Emily C. "Economic Assimilation for Immigrants in Chile: An Employment Convergence Analysis." Scholarship @ Claremont, 2016. http://scholarship.claremont.edu/scripps_theses/885.

Cardoso, Catarina. "The role of human capital in the Iberian countries' growth and convergence." Thesis, Loughborough University, 2011. https://dspace.lboro.ac.uk/2134/8523.

Jones, Basil Morris. "Growth, convergence and economic integration in West Africa : the case of the Economic Community of West African States (ECOWAS)." Thesis, University of Hull, 2001. http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.342964.

Song, Yiliu. "The Convergence Pattern in the Latter Economic Development: Evidence from 1959-2016 U.S. Counties." Scholarship @ Claremont, 2018. http://scholarship.claremont.edu/cmc_theses/1781.

Ryban, Ivan. "Economic convergence in the EU based on the Augmented Solow model." Master's thesis, Vysoká škola ekonomická v Praze, 2011. http://www.nusl.cz/ntk/nusl-85840.

Sandberg, Krister. "Hedonic prices, economic growth, and spatial dependence." Doctoral thesis, Umeå : Univ., 2004. http://urn.kb.se/resolve?urn=urn:nbn:se:umu:diva-272.

Sha, Ran. "Essays on the export performance and provincial growth of China / Ran Sha." Thesis, North-West University, 2007. http://hdl.handle.net/10394/1616.

An, Chi. "Catch-up and regional disparity in economic growth : an empirical evidence of the convergence hypothesis in China case." Graduate School of International Development. Nagoya University, 2005. http://hdl.handle.net/2237/6140.

Mugera, Amin William. "Productivity growth, convergence, and distribution dynamics in the Kansas farm sector." Diss., Manhattan, Kan. : Kansas State University, 2009. http://hdl.handle.net/2097/1374.

Patron, Galeana Eunice. "Neighborhood effects, convergence and growth in open economies of U.S. and Mexico." Diss., Columbia, Mo. : University of Missouri-Columbia, 2007. http://hdl.handle.net/10355/4866.

Gillespie, Noah Nehemiah. "Regional Growth in the United States: A Spatial Study of Convergence Comparing Real GSP per capita and the Human Development Index." Toledo, Ohio : University of Toledo, 2010. http://rave.ohiolink.edu/etdc/view?acc%5Fnum=toledo1271345694.

Wegerich, Alexis. "Digging deeper : global coal prices and industrial growth, 1840-1960." Thesis, University of Oxford, 2016. https://ora.ox.ac.uk/objects/uuid:7552ed01-53d6-40cd-94b2-ca5e3c8f5cd5.

Llamosas-Rosas, Irving Joel. "The Impact of the U.S. Federal Government's Expenditure on Regional Growth - Towards More Comprehensive Measurements." Diss., The University of Arizona, 2014. http://hdl.handle.net/10150/332659.

Liao, Shaojuan. "Three Essays on Economic Growth and Technology Development: Considering the Spillover Effects." Diss., Virginia Tech, 2012. http://hdl.handle.net/10919/37808.

Crespo, Cuaresma Jesus, and Martin Feldkircher. "Spatial Filtering, Model Uncertainty and the Speed of Income Convergence in Europe." Wiley, 2013. http://dx.doi.org/10.1002/jae.2277.

Marino, Carlos Eduardo dos Santos. "A desigualdade regional da renda no Brasil: uma anÃlise da hipÃtese de convergÃncia." Universidade Federal do CearÃ, 2004. http://www.teses.ufc.br/tde_busca/arquivo.php?codArquivo=1619.

Crespo, Cuaresma Jesus, Miroslava Havettová, and Martin Lábaj. "Income convergence prospects in Europe: Assessing the role of human capital dynamics." WU Vienna University of Economics and Business, 2012. http://epub.wu.ac.at/3597/2/wp143.pdf.

Gustavsson, Tingvall Patrik. "Essays on trade, growth and applied econometrics." Doctoral thesis, Handelshögskolan i Stockholm, Internationell Ekonomi och Geografi (IEG), 2001. http://urn.kb.se/resolve?urn=urn:nbn:se:hhs:diva-606.

Piazzeta, Rodrigo Ochoa. "Crescimento econômico na República da Irlanda e em Portugal entre 1985 e 2000 : uma análise comparada." reponame:Biblioteca Digital de Teses e Dissertações da UFRGS, 2007. http://hdl.handle.net/10183/11004.

Ribeiro, Erika Cristina Barbosa de Almeida. "Convergência de renda local entre os municípios brasileiros para o período 2000 a 2005." Universidade Federal de Juiz de Fora (UFJF), 2010. https://repositorio.ufjf.br/jspui/handle/ufjf/2613.

Crespo, Cuaresma Jesus, Elke Loichinger, and Gallina Vincelette. "Aging and Income Convergence in Europe: A Survey of the Literature and Insights from a Demographic Projection Exercise." Elsevier, 2016. http://dx.doi.org/10.1016/j.ecosys.2015.07.003.

Andrade, Carlos Filipe Teixeira. "Ensaios sobre o crescimento económico regional e a dinâmica do processo de convergência." Doctoral thesis, Universidade de Aveiro, 2015. http://hdl.handle.net/10773/14810.

Ejsmont, Karolina, and Camilla Andersson. "Regional Growth in Sweden : A Study of Absolute Convergence among Swedish LA-regions." Thesis, Jönköping University, JIBS, Economics, 2007. http://urn.kb.se/resolve?urn=urn:nbn:se:hj:diva-1488.

The theory of economic growth predicts that poorer regions will eventually converge towards the income level of the wealthier regions (Barro & Sala-i-Martin, 2004). The aim of this Bachelor thesis is to establish if absolute convergence in Gross Regional Product (GRP) growth rates exists across LA-regions in Sweden during the period 1994-2004. The variables used in the model of absolute convergence are; the level of initial GRP per capita in the year 1994 and the growth rate of GRP per capita. The authors of this thesis find support of absolute convergence among Swedish LA-regions of 1.67 percent per year. Convergence estimations are also performed for high-, mid-, and low-performing groups of regions in respect to their income level per capita. The low-performing group of regions is in fact converging faster towards the income level of the wealthier regions in Sweden than the mid- and high-performing group. Alternative measurement of convergence is the so called sigma-convergence. The authors find that it only holds for the group of high-performing regions. However, this measurement cannot be considered reliable, as the existence of absolute convergence is necessary for sigma-convergence, but it is not sufficient.

Ekonomisk tillväxtteori förutspår att fattigare regioner med tiden kommer att konvergera mot samma inkomst nivå som rikare regioner har (Barro & Sala-i-Martin, 2004). Syftet med denna Kandidatuppsats är undersöka ifall det förekommer betingad konvergenstillväxt av Brutto Regional Produkt (BRP) nivåer mellan svenska LA-regioner under perioden 1994-2004. Variablerna som används i modellen för betingad konvergens är den ursprungliga nivån av BRP per capita under år 1994, och tillväxtnivån av BRP per capita under perioden 1994-2004. Författarna av denna uppsats har funnit stöd för betingad konvergens bland svenska LA-regioner med en konvergenstakt på 1,67 procent per år. En estimering av konvergens är därtill utförd för hög-, mellan- och lågpresterande grupper av regioner med respekt till deras inkomstnivå per capita. Den lågpresterande gruppen har en snabbare konvergeringstakt mot den inkomstnivå de rikare regionerna i Sverige har, än vad de mellan- och högpresterande grupperna. Ett alternativt mått på konvergens är den så kallade sigma-konvergensen. Författarna finner att detta mått endast håller för gruppen av högpresterande regioner. Emellertid kan inte detta mått räknas som tillförlitligt, då förekomsten av betingad konvergens är nödvändigt för sigma-konvergens, men det är inte tillräckligt.

Viana, Alexandre Galdino. "AnÃlise de convergÃncia de bem estar dos municÃpios do estado do CearÃ 1991-2000, uma aplicaÃÃo da matriz de transiÃÃo de Markov." Universidade Federal do CearÃ, 2006. http://www.teses.ufc.br/tde_busca/arquivo.php?codArquivo=1537.

Svanlund, Jonatan. "Svensk och finsk upphinnartillväxt : Faktorpris- och produktivitetsutjämning mellan Finland och Sverige 1950-2000." Doctoral thesis, Umeå universitet, Ekonomisk historia, 2010. http://urn.kb.se/resolve?urn=urn:nbn:se:umu:diva-30633.

Drabo, Alassane. "Health, environment and economic development." Thesis, Clermont-Ferrand 1, 2011. http://www.theses.fr/2011CLF10376/document.

Carvalho, Herson Lee. "Uma anÃlise do processo de convergÃncia dos municÃpios brasileiros no perÃodo de 1980 A 2000." Universidade Federal do CearÃ, 2010. http://www.teses.ufc.br/tde_busca/arquivo.php?codArquivo=5036.

Berlin, Elin, and Carin Johansson. "Decreasing the Regional Disparities through the EU’s Structural Fund Policy : A Study on the Impact of the Structural Fund Policy on Sweden’s Regional Growth." Thesis, Jönköping University, JIBS, Economics, 2010. http://urn.kb.se/resolve?urn=urn:nbn:se:hj:diva-12635.

The purpose of this thesis is to analyze the impact of the EU’s Structural Fund (SF) policy between 2000-2007 on regional economic growth in Sweden. A regional convergence analysis is performed in order to examine if the SF policy’s overall aim of convergence is reached. Furthermore the study examines the growth of important Structural Fund goal indicators as employment, education and new firm formation in the Objective 1, 2 and 3 areas. The main growth- and convergence theories and their connection to regional policies such as the SF policy is used as the theoretical framework and form the study’s hypothesis.

The results show that absolute β-convergence exists between the Swedish urban areas. The growth of the goal indicators show that the Objective 1 and 2 areas, which received most part of the SF support have achieved their aims in increasing employment and new firm creation. In addition the Objective 2 areas have increased their share of population with higher education compared to the areas that did not receive either Objective 1 or 2 support. The Objective 3 areas, which received the least part of the SF support had a lower mean growth in employment than the areas that received no direct Objective 3 support. In addition the urban areas that only received Objective 3 support had a lower growth in share of population with higher education. From the results we can reach the overall conclusion that the positive impact of the SF policy on the goal indicators seem to be the largest in the areas that received most part of the funding. The final conclusion is that the SF are effective in enhancing economic growth in the areas of intervention.

Syftet med denna uppsats är att analysera EU:s Strukturfondspolitiks inverkan på regional ekonomisk tillväxt i Sverige mellan 2000-2007. En regional konvergensanalys utförs för att undersöka om Strukturfondspolitikens övergripande konvergens mål uppnås. Vidare undersöker studien viktiga Strukturfondmålindikatorers tillväxt, såsom sysselsättning, utbildning och nyföretagande, i Mål 1, 2 och 3 områdena. De viktigaste tillväxt- och konvergensteorierna och deras koppling till regional politik, såsom Strukturfondspolitiken används som den teoretiska bakgrunden och formar studiens hypotes.

Resultaten visar att absolut β-konvergens existerar mellan de svenska kommunerna. Resultaten för målindikatorernas tillväxt visar att Mål 1 och 2-områdena som har mottagit största delen av Strukturfondsstödet har uppnått sina mål att öka sysselsättningen och starta nya företag. Dessutom har Mål 2-områdena haft en högre ökning av andelen av befolkningen med högre utbildning jämfört med områdena som inte mottog något Mål 1 eller 2-stöd. Mål 3- områdena som har mottagit den minsta delen av Strukturfondsstödet hade en lägre tillväxt av sysselsättning jämfört med de områden som inte mottog något direkt Mål 3-stöd. De områden som enbart mottog Mål 3-stöd hade dessutom en lägre tillväxt av befolkning med högre utbildning. Utifrån resultaten kan vi dra den övergripande slutsatsen att den positiva påverkan av Strukturfondspolitiken på målindikatorerna verkar vara störst i de områden som har mottagit största delen av Strukturfondsstödet. Den slutgiltiga slutsatsen är att Strukturfondspolitiken sannolikt främjar den ekonomiska tillväxten i insatsområdena.

Tavares, Marcella Braga. "Análise da dinâmica da renda per capita nos municípios paraibanos, no período de 1970 a 2008." Universidade Federal da Paraíba, 2011. http://tede.biblioteca.ufpb.br:8080/handle/tede/4973.

Kalyoncu, Kahraman. "An Assesment Of The Effect Of Health And Nutritional Quality On Worker Effort And Economic Growth Through Physical And Human Capital: Cross-country And Turkish Evidence." Phd thesis, METU, 2008. http://etd.lib.metu.edu.tr/upload/12609606/index.pdf.

Diop, Mamadou. "Politique budgétaire procyclique, stabilisation conjoncturelle et croissance économique dans la zone Union Economique et Monétaire Ouest Africaine." Thesis, Rennes 1, 2013. http://www.theses.fr/2013REN1G023.

Silva, Junior Gilberto Gomes da. "Convergência de renda: uma análise para os municípios do Estado de Alagoas." Universidade Federal de Alagoas, 2010. http://www.repositorio.ufal.br/handle/riufal/1463.

Limaverde, Luciana Vasconcelos BrandÃo. "AplicaÃÃo de um teste de convergÃncia condicional para estados brasileiros." Universidade Federal do CearÃ, 2009. http://www.teses.ufc.br/tde_busca/arquivo.php?codArquivo=5727.

English

Economic Review | Latin America and the Caribbean April 2024

Revitalizing growth: an urgent agenda for latin america and the caribbean.

Latin America and the Caribbean has made slow but consistent progress addressing the imbalances induced by the pandemic in an international environment that is just now showing signs of stabilizing. However, challenges remain to redress fiscal imbalances, recover lost earnings power, and regain the advances in reducing poverty of the previous decade. The region’s central task, however, remains boosting lackluster growth rates. The report forecasts that regional GDP will expand by 1.6 percent in 2024. GDP growth of 2.7 and 2.6 are expected for 2025 and 2026. These rates are the lowest compared to all other regions in the world, and insufficient to drive prosperity.

Growth may be enhanced by inducing more competition in the region’s economies, combined with necessary complementary investments in firm and worker capabilities, and improvements in national innovation systems that can support the development, diffusion, and utilization of new ideas, products, and processes.

Main Messages

Chapter 1 | convergence to inflation targets but continued low growth.

While Latin America and the Caribbran has shown less dynamism than any other region of the world, it has fully recovered GDP lost during the COVID-19 pandemic, total employment is close to full recovery—although not for all groups—and poverty has fallen below its pre-pandemic level. Yet, the region confronts a global environment that is still difficult.

Despite solid macroeconomic management in the region, prospects for growth remain low, not only because of global conditions, but also because of long unaddressed structural issues. Regional growth remains constrained by low capital accumulation and low productivity growth over the longer term.

Chapter 2 | Competition–A Missing Ingredient for Productivity and Economic Growth in Latin America and the Caribbean

Throughout the region, low competition makes consumers pay higher prices for lower-quality goods and services, reducing overall welfare, and contributes to higher inequality, as monopoly prices on essential goods and services consume relatively more of the budgets of poorer households.

Increasing the competition that LAC firms face has the potential to stimulate growth and improve consumer welfare. Competition from low-cost consumer imports can help raise the standard of living of families across the income spectrum. Competition also has the power to nudge domestic producers into adopting new products and technologies, improving productivity at the firm level. The global integration of markets has contributed to more competitive environments, facilitating the diffusion and adoption of innovations that enhance efficiency. At the same time, competing in dynamic and challenging domestic markets is the best way for firms to prepare for exporting.

Growth Outlook

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PMC10409832

Positional Goods and Social Equality: Examining the Convergence Thesis

Institute of Philosophy, Nova University of Lisbon, Lisbon, Portugal

Several philosophers argue for the ‘convergence thesis’ for positional goods: prioritarians, sufficientarians, and egalitarians may converge on favouring an equal (or not too unequal) distribution of goods that have positional aspects. I discuss some problems for this thesis when applied to two key goods for which it has been proposed: education and wealth. I show, however, that there is a variant of the thesis that avoids these problems. This version of the thesis is significant, I demonstrate, because it applies to a person’s status as a citizen, which I suggest is the central concern of social or ‘relational’ egalitarianism.

Introduction

A range of goods— e.g., education, wealth, legal representation, political influence—are often regarded as ‘positional’. What these goods have in common is that their value to their possessor depends, at least in part, on how much of them they have compared to others, or where they are positioned in the distribution. While the notion was originally introduced in economics, several philosophers argue that the nature of positional goods bears important implications for the theory of justice; in particular, for the choice of distributive principle: i.e ., deciding between equality, priority, sufficiency, and so on. 1 The suggestion is that the positional aspects of some goods supplies a new line of support for their equal, or not too unequal, distribution and a rejoinder to some of the critiques that favour principles of priority or sufficiency over equality. 2 These non-egalitarian views (priority and sufficiency), so it is argued, have reason to support removing or reducing inequalities of goods with positional aspects, on the grounds that doing so may be the best or only way to benefit those who are badly off in absolute terms, or give all ‘enough’ by the relevant criterion. 3 Call this the convergence thesis .

In this paper, I examine this thesis and take up some concerns that suggest it may fail to hold in a range of cases. I argue that despite these challenges, the convergence thesis is particularly compelling when applied to a case not previously considered: the good of status, and in particular people’s status as citizens, which I suggest is the central concern of social or ‘relational’ egalitarianism. The account I develop brings to light an important distinction between two different kinds of positional goods, or two versions of the idea that positional goods are such that their value to an agent ‘depends on relative position’. For most goods commonly regarded as positional, there is only a contingent connection between relative position and the good’s value to an agent. Greater education than others often provides an advantage on the job market—but only because of contingent factors such as the nature of existing hiring practices, as I will discuss in what follows. By contrast, other goods are positional in a stronger sense. These goods are defined by , or consist in, occupying a particular relative position. For example, the good of placing first in a race is defined by ranking above everyone else. Along these lines, I develop a distinction between what I call ‘position-sensitive’ and ‘position-defined’ goods. I show that that the case for the convergence thesis is more compelling for goods of the second kind. This claim is significant, I argue, because a person’s status as a citizen—their ‘civic status’—is a position-defined good in this sense. Moreover, since a range of other goods are status-conferring—i.e. , they contribute to a person’s civic status, these other goods have position-defined aspects as well.

The paper is in three parts. In part one, I discuss some existing arguments for the claim that goods such as education and wealth have positional aspects and that, as a result, prioritarians and sufficientarians have reason to support their equal, or not too unequal, distribution. In part two, I discuss how the significance of these arguments may be limited as a result of their position-sensitive nature. For position-sensitive goods, it may be that benefits to the worse off can be achieved in two ways other than equal distribution: by growing the supply of the good (or the supply of what it is used for obtaining) or mitigating or removing its positional aspects. Since these strategies may also benefit the worse off, they may be favoured by prioritarians or sufficientarians, and so the convergence thesis will fail to hold in a range of cases. In part three, I propose an account of position-defined goods, and show that for goods of this kind, neither growth nor removal of their positional aspects is a possible strategy. I then characterize an important position-defined good: status—and in particular, ‘civic status’—and I discuss its significance for the convergence thesis.

The Convergence Thesis: Education and Wealth

Harry Brighouse and Adam Swift focus their argument for the convergence thesis primarily on education. 4 Education is a positional good, they point out, because one’s chances on the job market are largely determined by how educated one is relative to others. A bachelor’s degree will serve as a better means to employment if others are less qualified, worse when others are more qualified, other things being equal. To be sure, there are other valuable aspects of education that are not positional, such as the intrinsic value of learning a subject, which one could enjoy to a greater or lesser extent in isolation. More precisely, then, we can say education-as-a-means-to-employment is a positional good: its value to an agent depends on where they are positioned in the distribution. 5

Next consider wealth. Philosophers at least since Adam Smith have noted that possessing a relatively low amount of wealth or material goods may cause damage to a person’s self-respect and a loss of inclusion in social life. 6 A particular absolute level of wealth may provide a person adequate conditions for self-respect and social inclusion in a context where others do not possess a great deal more. But in another context with large differences of wealth, some may suffer stigmatization, living with the common awareness that they are judged as ‘less-than’ or inferior to others. 7 This might threaten their self-respect understood, as Rawls suggests, as involving ‘a person’s sense of [their] own value, [their] secure conviction that… [their] plan of life…is worth carrying out’ and ‘a confidence in one’s ability…to fulfill one’s intentions’. 8 Further, these effects of relative poverty may undermine social inclusion, understood, as Brighouse and Swift suggest, as ‘people’s ability to participate in the communal life and shared practices of their society’. 9

The suggestion, then, is that wealth has positional aspects as a means to self-respect and social inclusion. To be sure, there is another sense in which wealth, as a means to resources, is not positional, since some resources ( e.g., food and shelter) have value in absolute terms, regardless of what others have. Bearing this in mind, it is again more precise to say that wealth has positional aspects in the ways identified, or that wealth-as-a-means-to-self-respect, or wealth-as-a-means-to-social-inclusion, is a positional good.

It is worth noting how the concern with self-respect and social inclusion may come apart. While it might be empirically likely that social exclusion will damage people’s self-respect, it is not necessary that this effect is realized for social exclusion to be found objectionable. Even if relative poverty is not ‘felt’ by people, in the sense that they do not suffer damage to their self-respect, we may nonetheless find a loss of social inclusion problematic. Consider, for example, that social exclusion may involve a denial of what T. M. Scanlon calls ‘associational goods’, or opportunities for valuable association with others: along with being marked out as inferior, the relatively poor may be seen as ‘less eligible to be co-workers, potential friends, possible marriage partners, or even neighbors’. 10 A related aspect of social exclusion involves a loss of agency . Being regarded as ‘credible’, or as ‘somebody’ worthy of respect and taken seriously, often requires that people are able to present themselves in ways that require a particular amount of wealth. In the contexts discussed by Smith, this involved wearing a linen shirt or leather shoes. In our context, possession of a Smartphone (or at least access to the Internet), a credit card, and an address—all are all plausibly needed to be a ‘normal functioning agent.’ 11 These agency-impairing effects of relative poverty provide an explanation for why some people ‘waste’ money on things like iPhones and designer clothing. Such items can make a real difference for whether one is able to appear as ‘someone’ and be taken seriously. 12 Importantly, these exclusionary effects are not a result of people being poor in absolute terms (no one needs an iPhone to survive). Rather, the thought is that as societies become wealthier and inequality widens, the bar for appearing as ‘someone’ may become higher. We could for instance imagine a variation of Smith’s example: a super-wealthy society, where social attitudes are such that people need cashmere shirts and crocodile leather shoes to appear as ‘someone’ and function as a ‘normal’ member. The concern, then, is that relative differences of wealth alone may cause a loss of social inclusion, which may also (or may not) harm people’s self-respect. What it means for a person to have ‘enough’ wealth cannot be specified in absolute terms independently of what others have, but instead depends on the difference between their level of wealth and that of others.

These observations about education and wealth are taken to support the convergence thesis: one does not need to be an egalitarian to support removing or reducing inequalities of goods with positional aspects. 13 Since education and wealth have positional aspects in the ways described, concern for the worse off, or giving all enough, may support removing or at least reducing inequality with regard to these goods. Allow one group in society a much higher level of education, and the job prospects of the rest will suffer. Allow one group in a society great wealth, and the relatively poor may suffer harm to their self-respect and a loss of social inclusion. With regard to these positional goods, then, if we want to benefit the worse off, or give all enough, it may not be adequate to simply give them more of the good in question. What may be required is that the distance between them and others is not too great. On this basis, an equal, or not too unequal, distribution of these goods may be supported by prioritarians and sufficientarians. In some cases, priority and sufficiency may even support removing advantages from the better off, even when they cannot be transferred to others. As Scanlon notes, ‘the aim of avoiding stigmatization can in principle provide a reason for eliminating the benefits of the better off (or for wishing that they had never been created) even if these cannot be transferred to the worst-off’. 14 Similarly, the aim of improving the job prospects of the worse off, or giving them ‘enough’ of an opportunity to compete with others, may support eliminating benefits enjoyed by an educated elite, even when these benefits cannot be transferred to others.

Growth and Depositionalization of Position-Sensitive Goods

The convergence thesis is significant because it suggests that with regard to positional goods there may be less at stake than is commonly thought between seemingly opposed principles of justice. Equal, or not too unequal, distribution of positional goods may be supported on the widely accepted basis of concern for the worse off. However, the convergence thesis may be significantly limited, at least for goods such as education and wealth. This is because these goods are only ‘position-sensitive’. There are two features relevant for our purposes that characterize position-sensitive goods. The first is that the supply of the good (or what it is used for obtaining) can be grown; the second is that there is only a contingent connection between relative position and the good’s value, and so this connection can be weakened or eliminated entirely. Education and wealth share these features, as we will see, and this means that the convergence thesis may fail to hold in a range of cases.

Education as a Means to Employment

In the case of education-as-a-means-to-employment, greater equality may be one way to benefit the worse off. But is it the only way? Not necessarily, as Christopher Freiman argues, if permitting inequality creates growth and increases the social product. 15 The worse off may be benefited by growing the relevant end-use good of education: employment. 16 Insofar as permitting inequalities of education increases the quantity and quality of jobs available to the worse off, the convergence thesis no longer holds. Priority for those worse off, or giving each enough, may in such cases be better served by allowing instead of removing inequality. 17

To be sure, however, it seems unlikely that any degree of inequality will benefit the worse off, or that excessive advantages of a privileged elite will necessarily ‘trickle down’ to society’s poorest members. So, removing advantages from those at the top may still be the best way to improve the situation of the worse off or give all enough in some cases. But on the other hand, it is not implausible that some inequalities of education will allow for the creation of new industries, which will lead to the creation of more and better employment opportunities for the worse off. 18 In cases where this possibility holds, the convergence thesis does not, since prioritarians and sufficientarians might favour an unequal distribution that provides even greater benefits for the worse off, and greater aggregate benefits, than an equal distribution. It may be, too, that egalitarians would favour growth-promoting inequality of particular goods such as education, if this brings about equality of wellbeing, or whichever good is taken to ultimately matter for justice.

In response, it might be argued that at any given point in time, the number of jobs available is fixed, so growth is not a salient strategy. While this makes sense, it may be replied that we ought to be more interested in principles of justice for political institutions persisting through time, and not only for fixed points or ‘time-slices’. Nevertheless, as a matter of non-ideal theory, the fixed supply of employment opportunities may be a durable feature of our societies for the foreseeable future. For that reason, then, the possibility of growth may not entirely undermine the significance of the convergence thesis.

While the convergence thesis may nonetheless hold in a range of cases, then, this range will also be limited to a certain extent by the possibility of growth. This exact range, however, cannot be determined by political philosophy alone, depending as it does on empirical facts. While the significance of the convergence thesis could thus be evaluated by engaging with the relevant empirics, I will not pursue that issue here.

In addition, there is a second way the convergence thesis may fail to hold, which involves what we might call ‘depositionalization’. It is not a necessary truth that having a better education relative to others gives one better prospects on the job market. Because of this, it may be possible to remove or mitigate education’s positional aspects. As Brighouse and Swift note,

it is not simply having more education that makes the person’s income prospects better. It is having more education in an environment in which that causal link holds. We could eliminate the causal link between relative education and absolute income by equalizing wage rates. We could reduce the causal link between relative education and absolute chances of getting interesting and responsible jobs by reducing the stigma attached to nepotism, by allocating jobs by lottery, or by reforming the job structure to make jobs more equally interesting and responsible. 19

While total wage equalization, nepotism, or the assignment of jobs through lottery are not likely to find much support in liberal democracies, they point towards a relevant possibility. There may be more desirable forms of depositionalizing education. For example, it may be possible to implement policies that require employers to take into consideration only educational qualifications that are necessary for the job, and to avoid assigning positive evaluation to those in excess. 20 We also might seek to implement policies or to encourage social practices that allow for other kinds of credentials to be evaluated positively. Along these lines Debra Satz notes that in places such as Sweden, it is possible ‘to rise to high political positions because of one’s experiences in the labor union movement’, for example, whereas in other places these positions may tend to be almost exclusively filled by those with elite educations. 21

Policies that aim to implement these forms of depositionalization may be favoured over equal distribution for a number of reasons, especially if the latter were to require removing advantages from the better off without transferring them to others. For one, removing educational advantages would remove the non-positional benefits of allowing high levels of education in society such as the availability of expertise. Faced with a choice of removing the educational advantages of the better off versus mitigating the extent to which those advantages make labour market competition unfair for the worse off, prioritarians and sufficientarians would likely favour the latter. And again, it is also possible that egalitarians could prefer depositionalizing rather than equalizing particular goods such as education if doing so were a better way to bring about equality of wellbeing or whatever good is ultimately taken to matter. So, the convergence thesis may also fail over a range of cases in which depositionalization is possible. 22

Again, I only mean to point out that depositionalization is a live alternative to equalization and I will not attempt any decisive claims about whether depositionalization or equalization is more just, all-things-considered. These judgements would require a complex array of empirical and normative considerations that will vary in different contexts. Instead of taking up these issues, my aim is to show (in the ‘ Position-Defined Goods and Social Equality ’ section) that there is a version of the convergence thesis that is not subject to them.

Wealth as a Means to Self-Respect and Social Inclusion

What about the case of wealth as a means to self-respect and social inclusion? In this case it also seems that both the growth and depositionalization strategies are possible. On the one hand, we can ask whether growing the total amount of wealth in a society—making people better off in absolute terms, resource-wise—may improve the self-respect and social inclusion of the worse off, even despite inequality. On the other hand, we can ask whether it is possible to depositionalize wealth by weakening or removing the causal link between one’s relative level of wealth and its impact on self-respect and social inclusion.

One possibility suggested by Freiman involves appealing to what Rawls calls ‘non-comparing groups’, or what sociologists call ‘reference group’. 23 These include clubs, sports teams, families—even one’s social class. 24 These different groups provide a source of self-respect that is often somewhat insulated from other sources. For instance, a working-class person may gain a sense of self-respect through membership in their local sports club, and this might have a kind of eclipsing effect over dimensions in which they do not compare favourably, since people tend to emphasize those domains in which they do well. 25

It may be the case, then, that self-respect can be promoted by fostering, proliferating, and insulating non-comparing groups. The more of these groups there are, and the more independent they are from one another, the more opportunity there will be to score well and gain self-respect from any one of them. This strategy of proliferating and strengthening non-comparing groups is served by material growth, insofar as these groups depend on material resources to develop and function: think, for example, of the creation of the Special Olympics and Paralympics, or the recent growth of E-sports (competitive video games). 26 In this way, a wealthy but unequal society may provide more opportunities for self-respect than a poor but equal one. Interestingly, it seems here that the growth and depositionalization strategies overlap: by making many sources of self-respect salient, we weaken the contingent connection between relative wealth and self-respect.

We may doubt whether this suggestion is entirely compelling, however, insofar as people are likely to assign high importance to relative economic standing in societies as we know them. But even if we grant for the sake of argument that non-comparing groups function in this self-respect securing way, it is not obvious whether this strategy is plausible with regard to the concern with social inclusion. While non-comparing groups might provide a kind of social inclusion in relation to a particular group, this does not guarantee that a person will not suffer the kinds of loss of ‘associational goods’ and impairment of agency identified above. 27 In other words, belonging to and ‘scoring well’ in one particular non-comparing group may not guarantee that one is regarded as ‘someone’ in society in general. For example, winning an event in the Paralympics may do much to bolster the self-respect of a person with a physical disability; but they may still suffer stigmatization in society more generally.

Perhaps, though, there are other ways in which material growth might support both self-respect and social inclusion; and perhaps there are other ways in which wealth can be depositionalized. 28 For one, it seems plausible that self-respect and social inclusion of the worse off in the distribution of wealth is influenced not just by relative position, but by absolute level as well. Suppose there are two societies in which there is the same distance between the poorest and wealthiest groups, but in the first society the worse off have far fewer resources, in absolute terms, than in the other. In the second society the relatively poor group may be much less likely to suffer a loss of self-respect and social inclusion if they do well in absolute terms along key dimensions such as housing, education, healthcare, and so on. Self-respect and social inclusion of the worse off in the second society may be even more secure if the uses of wealth are limited. If having relatively more wealth only allows a person to buy more consumer goods, does not allow them to influence politics to a greater extent, or afford far superior healthcare or education, then having relatively less than others may be unthreatening to one’s self-respect and inclusion as a ‘full’ member of society. 29 In this way, wealth might become depositionalized.

Again, we might worry that in societies as we know them, people do in fact assign high importance to relative difference in wealth. Thus, we might think that no matter how wealthy a society gets, if we take humans as they are, then great differences in wealth will more or less inevitably pose some threat to self-respect and social inclusion. Recall, for instance, the previous example of a super-wealthy society in which a cashmere shirt and crocodile leather shoes are necessary to count as ‘someone’. In such a society, limiting the uses of wealth would not be enough to depositionalize it. But this points to another possibility for depositionalization: that the social meaning of wealth may be subject to change. It may be possible, for instance, to adopt policies that encourage people to change the relevant kinds of attitudes. One example, Christian Schemmel suggests, could involve ‘pointing out in school that there is no good reason to link social acceptability to the wearing of brand name clothes’. 30 In addition, policies might be adopted to encourage people to base their self-respect and attitudes towards others on the basis of their moral character or virtue. 31 That these kinds of social change are live possibilities is evidenced by looking at different historical contexts. According to common standards in Maoist China, for example, great wealth marked one out for stigmatization, and poverty did not, instead serving as evidence of one’s commitment to the cause of the times. 32

It is not obvious, of course, how feasible it is to change the relevant attitudes. As such, the convergence thesis might hold quite robustly, over an extensive range of cases. But what the previous considerations show is that it is also not obvious that equalizing wealth will always be the best or only way to benefit the worse off with regard to self-respect and social inclusion, and so the convergence thesis may fail to hold in a range of cases.

Position-Defined Goods and Social Equality

To take stock so far, the convergence thesis holds that prioritarians, sufficientarians, and egalitarians all have reason to support the equal distribution of particular goods with positional aspects. This thesis has been advanced with regard to education and wealth, but it is not clear that removing or reducing inequalities of these goods will always be the only or best way to benefit the worse off or bring all up to a standard of sufficiency. In both cases, this can be explained in virtue of fact that the goods in question are ‘position-sensitive’. Position-sensitive goods possess two features, each of which corresponds to one of the strategies that might benefit the worse off instead of equal distribution. The first feature of position-sensitive goods is that they are a means to other goods which do not have a fixed supply. As we saw, relative position in the cases of education and wealth are means to employment or self-respect and social inclusion. But the overall supply of employment, as well as opportunities for self-respect and inclusion, can be grown in various ways, in some cases by permitting inequality. The second feature is that the value of position-sensitive goods to an agent only contingently depends on relative position. It follows from this feature that the situation of the worse off can be improved by weakening or eliminating this link. As a result of these two features, the convergence thesis is limited for these goods. In a range of cases, prioritarians or sufficientarians (and perhaps egalitarians too) may favour growth or depositionalization over equal (or more equal) distribution of these particular goods.

Does this mean the convergence thesis is unimportant? I do not think so. As noted, it may still hold in many cases. I have not meant to suggest that prioritarians or sufficientarians will never have reason to favour greater equality of education and wealth based on the above considerations. And in some cases, the convergence thesis may hold partially: priority or sufficiency may favour reducing inequality in combination with other strategies. What I want to stress, however, is that that favouring the equal distribution of these goods does not follow just in virtue of their position-sensitive features. It must also be shown that neither de-positionalization nor growth can do better. Whether growth, depositionalization, or equal distribution is best supported by a given principle of justice will involve complex and uncertain empirical considerations, such as how far inequalities really do create growth (perhaps a matter best left to economists) as well as how far groups really are ‘non-comparing’ (perhaps best left to sociologists). In addition, the issue will require further normative consideration ( e.g., which kinds of depositionalization would be favoured by justice) that I will not pursue here.

On the other hand, the convergence thesis would be of even greater interest if there are goods for which growth and depositionalization are not just infeasible, but impossible. I will show that this is the case for a different class of ‘position-defined’ goods. This result is significant because people’s civic status is both position-defined and an important (even fundamental) concern of justice, as argued for by social or ‘relational’ relational egalitarians. Moreover, a range of goods are ‘status-conferring’ in that they constitute a person’s civic status, so the version of the convergence thesis I propose bears on their distribution as well.

Position-Defined Goods Characterized

What makes a good position-defined? We have seen that, for position-sensitive goods there is only a contingent connection between relative position and the good’s value to an agent, as in the cases of education-as-a-means-to-employment and wealth-as-a-means-to-self-respect and social inclusion. Position-defined goods, by contrast, are defined by , or consist in a particular relative position. Consider the good of ranking well in a competition; e.g ., coming first place in a race. To enjoy this good just is to occupy a particular position relative to others—namely, performing better than them. While one might have an interest in performing well in absolute terms—by finishing the race in a certain amount of time, regardless of how others perform—this is not the same as the interest one might have in achieving a certain rank, say, taking home the gold medal.

This characteristic of position-defined goods bears on the applicability of the depositionalization and growth strategies. Notice, in the first case, that it would be simply confused to try to ‘depositionalize’ the value of coming first place in a race. Since the value of coming first consists in ranking above all others, an attempt to remove the positional aspect of this good would be to remove its value, or to replace it with something else. If gold medals in the Olympics were awarded according to some other criteria, say through lottery, or if every participant received one, they would no longer be valued in the same way, if at all. The second possibility, growing the supply of position-defined goods (or their uses), is also not entirely coherent. To be sure, it might seem like the supply of first place finishes is enlarged when people tie for first. Following this thought, it might be suggested we can grow the supply of first place finishes by awarding a gold medal to anyone who achieves a certain threshold of performance, in absolute terms. (This may also be regarded as an attempt at mitigating positionality.) But in the case of a tie for first place, or if ‘first-place’ were awarded on the basis of achieving a certain threshold, it would no longer have the same value, since it would no longer mark one out as the uniquely top performer (which is, presumably, what many competitors are after). In this way, depositionalizing or growing the supply by equalizing a position-defined good such as a gold medal involves a kind of incoherence, because it is defined in terms of ranking better than others.

In the case of position-defined goods, then, depositionalization and growth are not entirely coherent possibilities as they are for position-sensitive goods. This would be insignificant if all position-defined goods, such as rank in athletic competition, were not central to the theory of distributive justice. I argue, next, however, that there is another position-defined good—the rank or status people have as citizens—that is of central importance for distributive justice, as argued by social or relational approaches to egalitarianism.

Civic-Status as a Position-Defined Good

To begin, I want to suggest how the notion of ‘status’ in general can be understood as a kind of institutional rank. First, consider how an ‘institution’ is defined by as Rawls as ‘a public system of rules, which defines offices and positions with their rights and duties, powers and immunities, and the like’. 33 By defining various positions, institutions may assign their members various ranks, as ‘above’, ‘below’, or equal to others. In some cases, this ranking is explicit; but in other cases, it is less clearly so. Academic departments, for example, distinguish between various ranks of professors, with varied powers, responsibilities, and benefits. Martial arts clubs distinguish between the ‘Sensei’ and the various ranks of students (black belts are above the orange belts who are above the yellow belts, and so on). Families, less explicitly, may rank parents as the ‘head(s) of the household’ with older children being ‘above’ the younger ones, having greater rights and responsibilities. 34 Status, in this sense of an institutional rank, is a position-defined good. What it is to hold a particular status is defined by a particular relative position—as above, below, or equal to others. 35

Of particular importance for social justice is civic status—the rank people have as citizens under social, political, and legal institutions. 36 We can think of civic status as involving three elements: one objective; another, communicative; and a third, intersubjective , outlined as follows. 37

Objective : This element specifies the distribution of goods that are required to confer people a status as equal citizens. This may involve, for example, equal basic liberties; constraints on inequalities of income and wealth, and adequate education and healthcare. 38

Communicative : It is not enough that people are given these status-conferring goods on any basis ( e.g. , their being equally deserving, intelligent, and so on). Instead, these goods are given to people on the basis that they are antecedently equals; and their distribution publicly communicates respect for persons as equals. 39

Intersubjective : The equal distribution of status-conferring goods is a matter of common knowledge, setting a public standard for how people ought to regard and treat each other as equal citizens.

I use the term civic status to register that equal status in this sense is compatible with inequalities of social esteem or what might be meant by ‘social status’. Some may enjoy a high level of social status or esteem in virtue of their celebrity as actors, performance as athletes, or their possession of rare paintings. But this sort of local, domain-specific ‘social status’ inequality is compatible with all sharing a kind of global and domain-generic status as equal citizens. Someone being highly esteemed in a domain such as musical performance is no reason for them to be regarded as belonging to a fundamentally different class of citizens, provided all share the same basic liberties, if economic inequalities are not too large, and so on, however the objective element of the account is determined. 40

The intersubjective and communicative aspects are important because they are required for people to enjoy the position-defined good of equal civic status, as opposed to ‘merely’ enjoying a particular set of goods. To see this, imagine two cases in which each person in a society has an equal amount of the kinds of status-conferring goods identified above. In one society, this is a matter of common knowledge: each person knows that they have the same set of status-conferring goods as anyone else, they know that others know this, they know others know this, and so on (and so the intersubjective dimension is satisfied). 41 Moreover, there is common knowledge that each person is entitled to these goods on the basis that they are equals (and so the communicative dimension is satisfied). 42 In the second case, by contrast, each person does in fact objectively possess an equal set of status-conferring goods, but they are unaware of what others have, and the equal distribution does not publicly communicate any particular message. It is only in the first case that each person enjoys the position-defined good of having a status as an equal. Because the intersubjective and communicative dimensions are satisfied, there is a public ranking of people as equal citizens which is not present in the second case. In this sense, then, civic status is a good that is defined by a relative position of equality and involves objective, intersubjective, and communicative aspects.

To be sure, there seems to be a sense in which a person’s civic status may not be entirely determined by relative position. We can imagine two societies in which all enjoy a status as equals, but in one society the level of status-conferring goods— e.g. , rights and liberties, income and wealth—is much higher or more extensive than the other. Here it seems we would want to say that the status people have as equals is ‘higher’ in the society in which the enjoyment of status-conferring goods is greater. In this case, however, what is greater is the enjoyment of non-positional goods. The position-defined good of civic status they confer is the same in each society. By analogy, all runners in a race may simultaneously achieve better scores while their relative ranks stay fixed.

The Convergence Thesis Revisited

Since civic status is a position-defined good, depositionalization and growth are not viable strategies to benefit the worse off. First, it is not possible to reduce the extent to which the value of civic status depends on relative position, since it is defined by or consists in relative position. What matters is not that people have a particular degree of civic status independently from what others have; what matters is that they have a civic status as an equal. 43 Second, the growth strategy relies on the possibility that the worse off might enjoy a greater amount of a good under an unequal distribution than they would under equality. In other words, benefitting the worse off favours an unequally divided pie, if its smaller slices are bigger than a smaller pie equally shared. As matter of definition, however, some holding a high civic status entails that others hold a low status. It follows, then, that an equal distribution of civic status is better for the worse off than any other distribution (all else equal).

For this reason, there would seem to be little reason to adopt any principle other than equality insofar as we are concerned with benefitting the worse off with regard to this good. Consider, for example Rawls’s difference principle, which permits inequality when it provides the worse off more benefits than they would enjoy under equality. This principle applied to civic status would be equivalent to equality. It would also seem to make little sense to adopt a principle of civic status priority or sufficiency over equality. Perhaps a prioritarian may permit a class of inferiors if they do not assign them a very high degree of priority, or if they judged there to be enough aggregate benefit from allowing a class of superiors. While divergence is still possible in this sense, this kind of view is not likely to be found very plausible, insofar as being ranked as an inferior or second-class citizen has very bad effects on people’s wellbeing.

More plausible, perhaps, is the case of ‘relational sufficiency’, which requires that people are able to ‘relate as sufficients’ rather than as equals. 44 Kasper Lippert-Rasmussen suggests, for instance, that this view might permit ‘unequal relations between a worshipping religious follower and a sufficiently respectful guru…or a boss with suitably circumscribed powers and an employee with alternative employment opportunities’. 45 Similarly, John Tosi claims that people do not need equal status ‘across the board’: ‘[t]hey do not need a workplace without hierarchical management, for instance, or the elimination of other voluntary associations that admit of distinctions of status.’ 46

While these suggestions have some plausibility, they do not seem to involve inequality of civic status. Indeed, if we share the intuition that the kind of unequal relations just mentioned are unobjectionable, it seems to me that we do so because we are assuming a background of equal civic status. As noted before, equality of civic status (and, I think, social or relational equality more broadly) need not involve everyone having exactly the same status in all social dimensions. As Samuel Scheffler noted in an early discussion ‘differences of rank, power, and status are endemic to human social life…’ but further, he suggests it does not seem necessary, ‘in order for a relationship to qualify as having an egalitarian character, that it should be altogether unmarked by distinctions of rank or status’. 47

Developing this thought, social egalitarians can identify a particularly salient dimension such that if people are equal in that dimension, distinctions of rank and status in other domains may not damage the overall egalitarian character of the relationship. On my account, equal citizenship is this particularly salient dimension. If people rank as equal citizens, then some forms of hierarchy in the workplace, or religious organizations, and so on, may not upset this fundamental equal relationship, especially if the kinds of hierarchy in these contexts are limited in particular ways. It is telling, in this regard, that the examples of relational sufficiency above involve, for instance, a boss with ‘circumscribed powers’ and an employee with ‘alternative opportunities’, or voluntary associations that admit of distinctions of status. None of these examples of supposed relational inequality involve people relating as unequal citizens; and if they did, then we would have reason to find them objectionable. Thus, with regard to civic status, sufficiency is not a plausible alternative to equality. Put another way, what it is to have enough civic status is for it to be equal.

On this basis, there is a compelling case for the convergence thesis when applied to the good of civic status. This is significant, because there are further implications for the range of status-conferring goods (whatever they are determined to be exactly), such as the basic liberties, income and wealth, education, healthcare, and so on. Since these goods function to rank people as citizens, and so have distinctive positional aspects in this regard, this impacts what is required to benefit the worse off, or give all ‘enough’ of these goods. While it would be beyond the scope of this paper to give a complete account of these implications, I will try to further illustrate the idea that there is distinctive concern at stake.

In the case of the basic liberties, for example, it would appear that anything other than an equal distribution would function to rank some as inferiors, and so be unacceptable. 48 For other status-conferring goods, however, strict equality is not likely to be required. Nevertheless, a greater degree of equality may be required on the basis of a concern with realizing equal civic status, than if we are concerned with other positional aspects—for example, labour market opportunity.

Consider Debra Satz’s account of ‘adequacy’, or sufficiency in the distribution of education, where this threshold is specified by what a person needs to possess a status as an equal citizen. 49 She claims her conception of sufficiency converges with egalitarian considerations, because ‘adequacy is not only a function of the bottom of the distribution but also of the top of the distribution’. 50 Furthermore, this conception of sufficiency may support removing advantages from the top, without transferring them, since ‘citizens are not equals when there is a closed intergenerational social elite with disproportionate access to society’s positions of political and economic power’. 51

These claims are substantiated by the position-defined nature of civic status. Whether one has an adequate level of education to possess the status of an equal citizen depends on how much they have compared to others, and whether the overall distribution of education is equal enough. By contrast, consider education-as-a-means-to-employment. Whether one has ‘enough’ of this good appears, in principle, to be compatible with any range of inequality. For example, on sufficientarian (or prioritarian) grounds, the existence of a social elite may not be unjust if it were to improve the job prospects of the worse off from what they would enjoy under greater equality. This would be a case in which the convergence thesis no longer holds. Sufficiency or priority of education-as-a-means-to-employment would not require greater equality; and it would not be an improvement of justice to remove advantages from the top. On the other hand, the convergence thesis would still hold in this case for sufficiency of education-for-equal-civic-status. While the existence of a social elite may not necessarily threaten the job prospects of the worse off, it would threaten their equal civic status. In this way, the convergence thesis holds more robustly (over a more extensive range of possibilities) for education-for-equal-civic status than for education-as-a-means-to-employment.

It is worth pointing out, however, that this claim depends on the assumption that greater education can make a person a ‘social elite’, defined above in terms of having ‘disproportionate access to society’s positions of political and economic power’. One could imagine, alternatively, a society that has substantial inequality of education, but where having greater education provided no greater power over others. We could imagine, too, that education is not particularly valued, such that people with more of it are not thought of as ‘better-than’ in any significant way. In this case, inequality of education would not appear to undermine equality of civic status. This suggests two points (familiar from the discussion of wealth earlier in the paper): first, that whether inequality of a status-conferring good is incompatible with social equality depends on the permitted uses of that good; and second, it depends on the social meaning of the good—that is, whether possession of it is something that is valued or regarded in the relevant ways by the relevant community. Nevertheless, given that education is likely to provide a range of advantages in most societies, and to be regarded as something important, concern with equality of civic status is likely to require significant limitations on inequalities of education.

The kind of argument just suggested could be generalized to other status-conferring goods. For example, Brighouse and Swift note that healthcare is ‘latently’ positional, because being healthier than others provides an advantage on the job market. 52 On the approach taken here, we can point out a further positional aspect of healthcare: inequalities of healthcare may preclude some from being civic equals. Interestingly, because of the central importance of health for all aspects of life, it does not seem that inequality of healthcare may be rendered more compatible with social equality by limiting its uses, as in the case of education; and it also seems that the social meaning of health is likely to remain fairly stable across different contexts. Thus, a concern with equality of civic status is also likely to support significant limitations on inequalities of healthcare. 53

The category of positional goods warrants examination by political philosophers because they function differently than other goods in the theory of justice. The aim of this paper has been to advance this project. I explored the convergence thesis, or the claim that there may be less at stake than commonly thought between seemingly divergent principles of justice—priority, sufficiency, equality—with regard to positional goods. This idea has been notably advanced in the cases of education-as-a-means-to-employment and wealth-as-a-means-to-self-respect and social inclusion. It may not work so well in those cases. But it works perfectly in a case not considered: that of civic status, the good of central concern on social or ‘relational’ accounts of equality. The difference hinges on a distinction between position-sensitive and position-defined goods. This account is significant, I suggested, because a range of goods, such as education and healthcare, have distinctive positional aspects in virtue of their status-conferring role, and examining these aspects in further detail may be a fruitful topic of further research.

Acknowledgements

I would like to thank two anonymous reviewers for Res Publica as well as Kristin Voigt for helpful comments and suggestions. This paper evolved from a chapter of my PhD thesis and I am grateful to those who helped me with discussion and written comments along the way including Alexandra Oprea, Bob Goodin, Christine Sypnowich, Daniel Halliday, David Axelsen, Geoff Brennan, Jesse Hambly, Josef Holden, Lachlan Umbers, Seth Lazar, Shang Long Yeo, Tom Parr, William Tuckwell, and especially Philip Pettit. The research for this article was supported by funding from the Social Sciences and Humanities Council of Canada as well as the Portuguese Fundação para a Ciência e a Tecnologia, reference PTDC/FER-FIL/6088/2020.

Open access funding provided by FCT|FCCN (b-on).

Declarations

I declare that there are no conflicts of interest and that the submitted article complies with all of the publisher’s ethical standards.

1 For the original discussion of positional goods see (Hirsch 1995 ); for discussions in the philosophical literature see (Goodin 1995 ), (Scanlon 2003 ), (Brighouse and Swift 2006 ), (Satz 2007 ), (Ypi 2012 ), (Freiman 2014 ), (Halliday 2015 ), (Axelsen and Nielsen 2015 ), (Nielsen and Axelsen 2017 ), and (Harel Ben-Shahar 2018 ).

2 Some critics doubt a concern for equal distribution per se is important, involving irrationality, or worse, an inappropriate kind of envy towards the better off. Why should we support equal distribution if the worse off could fare better in an unequal distribution than they would under equality? Supporting equal distribution seems to involve holding that there is at least something valuable in ‘levelling down’: removing benefits from some while benefitting no one. For these reasons, many philosophers reject egalitarianism in favour of other principles such as giving each enough (sufficiency) or maximizing with greater weight given to the worse off (priority). See (Parfit 2002 ) and (Frankfurt 1987 ).

3 See (Brighouse and Swift 2006 ), (Scanlon 2003 ), (Goodin 1995 ), (Satz 2007 ), (Ypi 2012 ), (Axelsen and Nielsen 2015 ), and (Nielsen and Axelsen 2017 ). Some writers such as Brighouse and Swift focus primarily on the case of priortarianism, while others, such as Axelsen and Nielsen, as well as Satz, focus on sufficiency.

4 Brighouse and Swift ( 2006 ).

5 I borrow this term (and similar to follow) from Freiman ( 2014 ).

‘The Greeks and Romans lived, I suppose, very comfortably though they had no linen. But in the present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty which, it is presumed, nobody can well fall into without extreme bad conduct. Custom, in the same manner, has rendered leather shoes a necessary of life in England. The poorest creditable person of either sex would be ashamed to appear in public without them’. (Smith 1993 ), bk. 5, Ch. 2.

7 Rawls suggests that feelings of envy under such circumstances are appropriate or reasonable: ‘sometimes the circumstances evoking envy are so compelling that given human beings as they are, no one can reasonably be asked to overcome his rancorous feelings. A person’s lesser position … may be so great as to wound his self-respect’. (Rawls 1999 ), p. 535.

8 Rawls ( 1999 ), p. 131. There are various kinds of attitudes at stake here that are sometimes distinguished in the literature. Roughly, one notion of self-respect involves regarding oneself as owed certain forms of moral treatment; the other notion (sometimes called self-esteem) involves regarding oneself as scoring well according to some standard ( e.g., morality, athletics, music, and so on). These notions are defined with various terms such as ‘recognition vs. appraisal’; ‘entitlement vs. standard’; and ‘standing vs. standard’ self-respect. See, respectively, (Darwall 1977 ); (Bird 2010 ); (Schemmel 2021 ), Ch. 6.

9 Brighouse and Swift ( 2006 ), p. 481.

10 Scanlon ( 2018 ), p. 26.

11 Ibid., p. 30.

12 Consider the example, discussed by Scanlon, of an African American woman whose designer clothing apparently enabled her to have welfare payments for the granddaughter of her neighbour restored (while her neighbour had been turned away). See (Scanlon 2018 ), p. 30, discussing an online editorial (Cottom 2013 ).

13 The concern in the cases discussed is that inequalities are not too large (intuitively, some inequality with regard to education and wealth is unobjectionable). However, in the case of other positional goods—votes, for example—there appears to be reason to be concerned with any form of inequality. On the importance for the size of inequalities and positional goods, see (Harel Ben Shahar 2018 ).

14 (Scanlon 2003 ), p. 204.

15 Freiman ( 2014 ).

16 Notice that the suggestion here is not to grow the supply of education itself ( e.g ., creating more schools). This would not likely help the problem, because insofar as there remain inequalities of education, the job prospects of the relatively less educated will suffer.

17 For similar reasons, Rawls prefers the difference principle over a strictly equal distribution of income and wealth (Rawls 1999 ).

18 Freiman ( 2014 ).

19 Brighouse and Swift ( 2006 ), p. 488.

20 Goodin ( 1995 ), p. 257. Harel Ben Shahar ( 2018 ), p. 111–113.

21 Satz ( 2007 ), p. 644.

22 As noted previously, it is also possible that egalitarians might favour these strategies as well, if they bring about an equal distribution of wellbeing, or whatever metric of justice is ultimately taken to matter.

23 (Freiman 2014 ).

24 ‘The plurality of associations in a well-ordered society, each with its own secure internal life, tends to reduce the visibility, or at least the painful visibility, of variations in men’s prospects. For we tend to compare our circumstances with others in the same or in a similar group as ourselves, or in positions that we regard as relevant to our aspirations. The various associations in society tend to divide it into so many noncomparing groups, the discrepancies between these divisions not attracting the kind of attention which unsettles the lives of those less well placed’. (Rawls 1999 ), pp. 536–537.

25 Here is Nozick on the issue: ‘Everyone might view themselves as at the upper end of a distribution through the perspective of the particular weights he assigns. The fewer the dimensions, the less the opportunity for an individual successfully to use as a basis for self esteem a nonuniform weighting strategy that gives greater weight to the dimension he scores highly in’. (Nozick 2013 ), p. 245.

26 Freiman ( 2014 ), p. 349. Cf. Anderson ( 2012 ).

27 Freiman seems to hold that the non-comparing group-specific kind of inclusion is all that exists, suggesting ‘there is no monolithic, homogenous good that constitutes social inclusion in a pluralistic society’ (Freiman 2014 ), p. 352. This suggestion, however, ignores the sense in which people can suffer exclusion in the general ways identified in this paper.

On Smith’s account, then, commercialization created growth; but at the same time, there was a depositionalizing effect. The wealthy no longer used their wealth to exercise power over others, but instead sought material vanities, which could be regarded as ‘childish’ by others.

29 This is the strategy of ‘blocked exchanges’ identified by (Walzer 2008 ). See also (Miller 1995 ). Cf. (Schemmel 2021 ), pp. 249–250.

30 Schemmel ( 2021 ), p. 250.

31 I would like to thank an anonymous referee for this suggestion.

32 See discussion in (Ci 2013 ) and (Scanlon 2018 ), Ch. 3.

33 Rawls ( 1999 ), pp. 47–48.

34 An institutional ranking may be even less explicit, yet still present: in the global order, for example, the ‘Global North’ ranks ‘above’ the ‘Global South’, and certain passports are ‘stronger’ than others, allowing their possessors to travel more freely, and so on.

‘Status is a positional good…in a status system, not everyone can have the highest rank. High status assumes other positions beneath it; so if we seek a higher status for ourselves, we in effect support a scheme that entails others having lower status’ (Rawls 2001 ), p. 132.

36 Social equality can be understood to be important on several different grounds, including grounds of personal and impersonal value. See (Tomlin 2014). Most significantly, however, and perhaps least controversially, I hold that a concern with equality of civic status is grounded in the requirement that the state show respect for its members as equals—what Dworkin calls the ‘sovereign virtue’ or what Kymlicka calls the ‘egalitarian plateau’. See (Dworkin 2002 ), (Kymlicka 2002 ). No state respects its members as equals if it assigns some a status as second class or inferior citizens.

37 It is worth nothing that this understanding of social equality characterized in terms of an institutional rank differs from several recent accounts that characterize social equality in terms of particular interpersonal relations and dispositions. See (Scheffler 2015 ) (Kolodny 2014 ). See also (Viehoff 2019 ), for a useful characterization of political and interpersonal conceptions of social equality. The institutional approach favoured here is closer to the views developed by Elizabeth Anderson and Christian Schemmel. See (Anderson 1999 ) and (Schemmel 2021 ).

38 It is a difficult matter to resolve the question of exactly what distribution of goods is required to confer the right kind of equal status. For example, we could consider Rawls’s two principles as one possible way to spell out in detail the requirements of equality of civic status. And there are other possibilities, such as Elizabeth Anderson’s ‘democratic equality’ or Philip Pettit’s republicanism. For the most recent and developed account, see (Schemmel 2021 ).

39 On the communicative or expressive dimension, see (Anderson and Pildes 2000 ; Shiffrin 2017 ; Voigt 2018 ; Schemmel 2021 ).

40 This is not to say that it is not possible for some norms of esteem to undermine equality of civic status—for instance, if members of some groups are systematically assigned lesser esteem for comparable performances in a particular domain. See (Schemmel 2021 ), Ch. 6.

41 Lewis ( 1969 ).

42 We could imagine a society in which each person is given an equal set of status-conferring goods, but not on the basis of people’s equality. Suppose for instance, that one group is regarded as inferior, but given an equal set of status-conferring goods on the basis of pity, or the requirements of ‘noblesse oblige’. Intuitively, this would not suffice to give people a status as equal citizens.

43 Cf. Gheaus ( 2018 ), pp. 61–62.

44 Lippert-Rasmussen ( 2018 ), pp. 9–11; Tosi ( 2019 ).

45 Lippert-Rasmussen ( 2018 ), p. 10.

46 Tosi ( 2019 ), p. 55.

47 Scheffler ( 2005 ), pp. 17–18.

48 Cf. Rawls ( 1999 ), p. 477. See also Cass ( 2021 ).

49 Satz ( 2007 ). See also Anderson ( 2007 ).

50 Satz ( 2007 ), p. 638.

52 Brighouse and Swift ( 2006 ).

53 See Schemmel ( 2021 ), Ch. 9, for a relational egalitarian account of healthcare.

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The Convergence Hypothesis: History, Theory, and Evidence

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20.4 Economic Convergence

Arguments Favoring Convergence

Arguments That Convergence Is neither Inevitable nor Likely

The Slowness of Convergence

Calories and Economic Growth

Key Concepts and Summary

Self-Check Questions

Review Questions

Critical Thinking Questions

20.4 Economic Convergence

Arguments Favoring Convergence

Arguments That Convergence Is neither Inevitable nor Likely

The Slowness of Convergence

Bring It Home

What Is Convergence Theory?

Convergence vs. Divergence

Sociological Critiques

Economic convergence in the European Union

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Positional Goods and Social Equality: Examining the Convergence Thesis

Introduction

The Convergence Thesis: Education and Wealth

Growth and Depositionalization of Position-Sensitive Goods

Education as a Means to Employment

Wealth as a Means to Self-Respect and Social Inclusion

Position-Defined Goods and Social Equality

Position-Defined Goods Characterized

Civic-Status as a Position-Defined Good

The Convergence Thesis Revisited

Acknowledgements

Declarations

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