Convergence and International Factor Flows in Theory and History
NBER Working Paper No. 5798
Standard neoclassical growth models rarely admits international factor mobility: convergence may result from factor accumulation in a closed economy, or from technology transfer. Conventional models are thus poorly equipped to explain the contribution of international factor flows to convergence in history. A general model with many goods, and multiple mobile and fixed factors is developed. In response to recent historical research, a four-factor case is studied, with labor, capital, and resources as potentially mobile factors, and land fixed. The model is then explored in the context of recent historical analyses of the sources of long-run convergence and divergence.