International diffusion of knowledge labor productivity and catching up between North and South

Abstract

Most economists view technological differences as an important factor of disparity in productivity and growth gap across countries and an important obstacle of convergence between them. By following the models of Nelson and Phelps (1966) and that of Barro and Sala-i- Martin (1997), we develop two theoretical models to study the effects of the international diffusion of knowledge on labor productivity differences and catching up between northern and southern countries. The main results are: i) The productivity differences between northern and southern countries depend on the knowledge accumulation rate differences (innovation or imitation) and on the extent of specialization differences. ii) Catching up is an endogenous process and its speed depends on the rate of knowledge accumulation in the northern countries, on investment in human capital and on learning process in the southern countries. iii) The southern countries, if they catch up with the northern countries, cannot exceed them to be future leaders.