Convergence in resource productivity

Abstract

Are countries converging to the same levels of productivity in transforming natural resources into economic output? This question is of high importance as it determines the need for policy intervention in the pursuit of sustainable economic development. In this paper, we explore convergence patterns in resource productivity across more than 100 countries between 1970 and 2012. Additionally, we analyze the role of fundamental factors for convergence patterns and compare these patterns to labor productivity. Instead of overall convergence, our findings show club convergence in resource productivity, with convergence clubs closely mirroring levels of economic development. The clubs converge towards the same growth rates, not the same levels of productivity. We find that initial levels of GDP per capita, human capital, and population density are strongly associated with club membership. There are noticeable differences between the convergence patterns of labor and resource productivity. Democracy, human capital and temperate climate are particularly strong predictors for club membership in the case of labor productivity, whereas population density is exclusively associated with club membership for resource productivity.