Journal Article

The spatial dimension of economic growth and convergence: Introduction


  • Bode
  • E.
  • Rey
  • S.J.

Numerous empirical studies of national and regional economic growth and convergence undertaken in the past one and a half decades have referred explicitly or implicitly to variants of the Solowian model of economic growth.1 In his PhD thesis, Xavier Sala‐i‐Martin (1990) shows for a closed economy that, under specific conditions, the process of convergence of per‐capita income towards its long‐run steady state growth path can be modelled as a partial adjustment process. During the adjustment process, the growth rate of per‐capita income over a given period of time is correlated negatively with the initial per‐capita income level. The main force behind economic convergence is decreasing returns to capital accumulation. The implication is absolute beta convergence: income differences between independent countries or regions will diminish over time, if the countries or regions share the same steady state, determined by their institutional, behavioural, geographical and technological characteristics.

Experte IfW Kiel