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Institutions and the convergence hypothesis: The cross-national evidence

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Abstract

DeLong and others have shown that cross-country convergence in per capita incomes is limited to samples of currently-industrialized nations, or universal-literacy nations. In particular, income dispersion has failed to decline in groups of ex ante rich nations. This study finds strong convergence in per capita incomes among nations with institutions (namely secure property rights) conducive to saving, investing, and producing. Incomes are shown to converge even within ex ante rich samples when measures of institutional quality are held constant.

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Authors and Affiliations

  1. American University, School of Public Affairs and Center for Institutional Reform and the Informal Sector, University of Maryland, 20742, College Park, MD

    Steve Knack

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  1. Steve Knack
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Additional information

Valuable research assistance was provided by Ricardo Sanhueza and Christos Kostopoulos. Computer time was provided by the University of Maryland Computer Science Center. Data were provided by Ross Levine, Robert Barro and Holger Wolf, Political Risk Services, and Business Environmental Risk Intelligence. Chris Clague, Philip Keefer, and Mancur Olson supplied numerous beneficial comments and suggestions; any remaining errors are the sole responsibility of the author.

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Knack, S. Institutions and the convergence hypothesis: The cross-national evidence. Public Choice 87, 207–228 (1996). https://doi.org/10.1007/BF00118645

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