Can the Rest of East Asia Catch Up with Japan: Some Empirical Evidence
Faculty of Business and Law
School of Accounting, Finance and Business Economics
By applying the combined endogenous growth/diffusion model, we find strong and robust evidence of the existence of multiple convergent equilibria across the 10 East Asian economies in 1960–1997. The main conclusion is that, with the assumption of the same source of technology diffusion for all economies, East Asia will have in the long run the same growth rate as that of the leader (Japan), but with two mutually exclusive convergence clubs. This has important implications for an economy when forming its development policy to catch up on its target leaders.