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A Matter Of Time: Revisiting Growth Convergence In Developing Countries

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Executive Summary

The authors propose a new methodology for testing inter-regional growth convergence in developing countries. Labor surplus economies are typically characterized by large inter-regional short-term growth fluctuations, which tend to mask long-term growth trends. These fluctuations render standard tests for growth convergence unreliable. A frequency domain analysis that separates between short and long-run growth offers new insights. They develop a growth-model and provide an empirical application using provincial data from China covering the period 1978 - 2009.

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