Wednesday, April 18, 2007

An Evidence on Growth Theory

I found that this posting may add our empirical evidence about growth theory-there is a strong tendency that economies among countries converge. However, we should note that this graph does not take into account population growth-the graph only depicts adjusted GDP with purchasing power parity (PPP).

As i argued before, taking account population makes us sure that one country produces more output than that of other countries. If we found that population growth among these countries move in the same pace-and i guess they don't, we could say that the graph is completely correct. Yet, if we take into account population growth, the whole story doesn't change anyway- economies still converge. what may change is time in which economies converge.