Economic Themes (2011) 49 (1) 1, 1-13

THE HYPOTHESIS OF CONVERGENCE IN ENDOGENOUS GROWTH THEORIES


Slobodan Cvetanović, Saša Obradović, Miroslav Đorđević

Abstract: The author gives an overview of the key implications and consequences of the Solow model related to the notion that all economies have their (steady-state) condition stabilized per capita income to which converge, regardless of the historical starting point. The hypothesis of convergence is given through the prism of the endogenous growth model. In other words, regardless of the initial per capita capital stock, the two countries with similar rates of savings, depreciation rates and rates of population growth will in the long run, converge in living standards, but only under certain conditions. If you have the same potential stabilized income, poorer countries will have higher growth rates than richer countries in the way of the international convergence of income levels per capita, which results in proving the hypothesis of convergence.

Keywords:  economic growth; equity; convergence; income and productivity

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