Catching Up, Forging Ahead, and Falling Behind

TLDR

Productivity growth rates are thought to be inversely related to productivity levels across countries. The study extends the catch‑up hypothesis to explain why convergence strength fluctuates and examines how it relates to early leaders’ and latecomers’ relative success. It uses an extended catch‑up framework to model convergence dynamics and link them to early and late entrants’ performance. A century of data from industrialized countries confirms the inverse relationship, shows convergence mainly in the first 25 years after WWII, and reveals that convergence reshaped productivity rankings.

Abstract

A widely entertained hypothesis holds that, in comparisons among countries, productivity growth rates tend to vary inversely with productivity levels. A century of experience in a group of presently industrialized countries supports this hypothesis and the convergence of productivity levels it implies. The rate of convergence, however, varied from period to period and showed marked strength only during the first quarter-century following World War II. The general process of convergence was also accompanied by dramatic shifts in countries' productivity rankings. The paper extends the simple catch-up hypothesis to rationalize the fluctuating strength of the process and explores the connections between convergence itself and the relative success of early leaders and latecomers.