the ideal scenario that is unlikely to occur. Thus, the main focus of this paper will be on conditional convergence. This paper will carry out a cross-country analysis of 86 countries over the period 1960-2005, in order to evaluate whether there is empirical evidence of conditional convergence. The next chapter will look at the basic Solow model and introduce the key variables which will be used to carry out the empirical analysis later in the paper. Chapter 3 discuss a number of additional variables that have been identified in the growth literature and which could affect the dynamics of the model and assess to what extent these variables are important for the main discussion. After that, chapter 4 will outline the data and the methodology used. Chapter 5 will continue the detailed outline of the model. After which, Chapter 6 will proceed with a discussion of the results. Finally, chapter 7 concludes by summarizing the main results and outlining some possible future research opportunities. Chapter 2 Economic growth and convergence, the Solow model Some of the differences in economic growth are associated with the initial conditions prevailing in the country. The position in 1960 depends on things such as political stability of the country, demographic developments, issues of nutrition, child mortality rates, number of patients per doctor, etc. However, it is very difficult to represent all of these conditions at once. In this paper, as it is standard in the literature, the initial level of GDP per worker will be used as a representation of the initial position of the country. 2.1 The basic Solow model The predecessor of most of today’s growth models, even if they are not directly drawn from it, is the Solow model. This model is also known as the Solow-Swan model, and was first introduced in 1956. Although, it is a simple model, the Solow model has a number of advantages. Earlier models did not distinguish between old and new technology, simply looking at the two types as one. Solow, on the other hand, was the first economist to distinguish between current and technology, by giving ‘old’
the ideal scenario that is unlikely to occur. Thus, the main focus of this paper will be on conditional convergence. This paper will carry out a cross-country analysis of 86 countries over the period 1960-2005, in order to evaluate whether there is empirical evidence of conditional convergence. The next chapter will look at the basic Solow model and introduce the key variables which will be used to carry out the empirical analysis later in the paper. Chapter 3 discuss a number of additional variables that have been identified in the growth literature and which could affect the dynamics of the model and assess to what extent these variables are important for the main discussion. After that, chapter 4 will outline the data and the methodology used. Chapter 5 will continue the detailed outline of the model. After which, Chapter 6 will proceed with a discussion of the results. Finally, chapter 7 concludes by summarizing the main results and outlining some possible future research opportunities. Chapter 2 Economic growth and convergence, the Solow model Some of the differences in economic growth are associated with the initial conditions prevailing in the country. The position in 1960 depends on things such as political stability of the country, demographic developments, issues of nutrition, child mortality rates, number of patients per doctor, etc. However, it is very difficult to represent all of these conditions at once. In this paper, as it is standard in the literature, the initial level of GDP per worker will be used as a representation of the initial position of the country. 2.1 The basic Solow model The predecessor of most of today’s growth models, even if they are not directly drawn from it, is the Solow model. This model is also known as the Solow-Swan model, and was first introduced in 1956. Although, it is a simple model, the Solow model has a number of advantages. Earlier models did not distinguish between old and new technology, simply looking at the two types as one. Solow, on the other hand, was the first economist to distinguish between current and ‘old’ technology, by giving
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