Theory of Convergence and Real Income Divergence 1950-92

This article examines the issue of convergence of the standards of living of the North and the South at the aggregative average and the disaggregative country levels on the basis of internationally and intertemporally comparable real income data available in Penn World Tables over the period 1950-92. It finds significant evidence of widening gap in the standards of living of the two groups of countries. Only countries such as Korea, Taiwan and Thailand experienced a converging trend. There is some evidence of convergence between less rich North and richer North and between poorer South and less poor South.