Question

Which of the following represents a failure of the idea of Unconditional Convergence in
economic growth theory:

a.The GDP per capitas of the OECD countries have converged to each other over the past few decades.

b.The countries of Southern Europe have had faster growth rates of GDP per capita than those of Northern Europe, on average over the past few decades.

c.China and South Korea have grown rapidly over the past few decades.

d.Most African countries have not closed the gap to the per-capita GDP of the US.

Answer 1

Unconditional convergence essentially means that the Least developed countries standard of living will match up with that of the developed countries in the long run. All the countries standard of living will converge in the long run.

a. This is the form of unconditional convergence as the growth rates have converged over the past few decades.

b. The countries of Southern Europe have had faster growth rates of GDP per capita, which means the per capita growth rates have been higher than those in Northern Europe on average over the past few decades. This is a failure of the unconditional convergence as this is over the long run horizon and over the long run period, the standard of living should be the same.

c. China and South Korea have grown rapidly, but in what characteristic is not mentioned.

d. Most African countries have not closed the gap to the per-capita GDP of the U.S, but the time duration is not given, it could be that the gap has not been closed in the short run.

Thus b is the answer.