Unequal Global Convergence

Organised by

• Department of Economics

We study the spatial implications of structural transformation and economic growth using a novel dataset on the sub-national GDPs and employment by broad sectors of 687 regions in 34 countries. There has been a slowdown in the convergence rate between regions within countries since 1980. Moreover, the regional convergence process in most countries has stalled since 2010 despite residual spatial inequality. This decline in the rate of regional convergence is related to economic development, specifically to a structural transformation toward services. Globally, services employment exhibits a higher regional concentration than manufacturing and agriculture. Through the lens of a spatial model that features geographic mobility and agglomeration, we argue for a new role of structural change in spatial development. As an economy transforms toward services, economic activity becomes spatially concentrated, and regional convergence declines. This, in turn, accelerates global economic inequality and structural transformation toward services.

Co-authors: Shoumitro Chatterjee, Tatjana Kleineberg, Kan Kuno