Economic growth and economic development 36

Introduction to Modern Economic Growth
While there is no convergence for the entire world, when we look among the
“OECD” nations,1 we see a different pattern. Figure 1.15 shows that there is a
strong negative relationship between log GDP per worker in 1960 and the annual
growth rate between 1960 and 2000 among the OECD countries. What distinguishes
this sample from the entire world sample is the relative homogeneity of the OECD
countries, which have much more similar institutions, policies and initial conditions
than the entire world. This suggests that there might be a type of conditional
convergence when we control for certain country characteristics potentially affecting
economic growth.
JPN

.04

IRL

PRT
LUX

ESP
GRC

annual growth rate 1960-2000
.01
.02
.03

AUT

ITA
FIN

FRA

BEL
NOR

ISL
GBR

USA

DNK
SWE

NLD
AUS
CAN

CHE

NZL

9

9.5
log gdp per worker 1960

10

10.5

Figure 1.15. Annual growth rate of GDP per worker between 1960
and 2000 versus log GDP per worker in 1960 for core OECD countries.
This is what the vector Xt−1 captures in equation (1.1). In particular, when this
vector includes variables such as years of schooling or life expectancy, Barro and
1That is, the initial members of the OECD club plotted in this picture, which excludes more
recent OECD members such as Turkey, Mexico and Korea.

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