A new empirical approach to catching up or falling behind.

The literature on ‘catching up’ suggests that due to technology spill-overs, relatively backward countries should grow at a faster rate. The possibility of ‘falling behind’ is not considered (explicitly) in most of these models. In this paper a dynamic (non-linear) model is developed in which ‘catching up’ and ‘falling behind’ are both possible. The model is tested empirically using non-linear least squares methods.

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