Insufficient Economic Convergence in the World Economy: How Do Economists Explain Why Too Many Countries Do Not Catch-up?

Abstract

This essay reviews different economic perspectives on the development of productivity and living standards in developing countries. It shows that neoclassical approaches to the problem of economic convergence fail to provide a satisfactory explanation of why economic convergence does not take place. In doing so, it reviews seven heterodox arguments on why developing countries do not converge. The article argues that the lack of economic convergence is a result of market forces which lead to the reproduction of underdevelopment. Therefore, comprehensive state interventions are needed to overcome underdevelopment. The article discusses different alternative policies which are needed to trigger development, thus countering the perspectives of neoliberal economists and the Washington Consensus.