Convergence, Divergence and Changing Trade Patterns: Theoretical Inquiries into the Role of Preferences, Factor Accumulation, Technological Change and Government Intervention

1. Introduction and overview Until still few years ago, economic growth theory (going back to Solow, 1956; for an introduction cf. Burmeister and Dobell, 1970) predicted convergence of both growth rates and level of per capita income of economies which share identical preferences, technologies and same population growth rates, independently of initial conditions. Countries with a low capital sk grow faster than those with a higher capital sk, until, in the long-run, they all converge to a c...