THE PRODUCTIVITY CONVERGENCE DEBATE - A THEORETICAL AND METHODOLOGICAL RECONSIDERATION

Two fundamental issues which have been ignored in the convergence deba te are addressed in this paper. First, there has been little attention paid to the development of a general model which is able to explain c onvergence or divergence. Second, in the rush to put data to a converg ence hypothesis, researchers have failed to consider certain methodolo gical procedures with respect to the treatment of capital. To remedy t his problem we use an input-output approach to measure catch-up. To ad dress the theoretical lacunae we present case studies of Portugal and Japan, two countries which by 1959 had attained the threshold level of development required to join the 'convergence club', but which, for v arious historical (path-dependent) reasons, have diverged rapidly from each other in the period since the late 1950s. (C) 1996 Academic Pres s Limited