Drivers of unconditional income convergence

Abstract

We decompose economic growth into technical efficiency change, technological change, and capital accumulation to analyze the drivers of unconditional income convergence across countries observed in recent decades. Our analysis suggests that technical efficiency improvement and capital accumulation are the main drivers of the observed unconditional convergence. Specifically, developing countries experienced faster efficiency improvement than developed countries in the period of unconditional convergence (1995–2019), which was not the case in the preceding period characterized by the lack of income convergence (1970–1995).