GDP per capita convergence

GDP per capita convergence, often described as the catch-up process, refers to the process by which less advanced economies with lower-income per capita converge towards more advanced economies through higher growth rates, as they capitalise on technology transfer, inward investment, and relatively lower labour costs.

Key findings

Between 2001 and 2017, gaps in GDP per capita with respect to the United States have narrowed significantly in most emerging economies (except Brazil and South Africa), the Baltic States and Eastern European countries, although the pace of convergence has slowed. In addition, in countries severely hit by the financial crisis, such as Greece, Italy and Portugal, gaps widened. In 2017, GDP per capita levels were more than 50% lower than those of the United States in the BRIICS, Latin American countries, Greece, Hungary, Latvia, Poland and Turkey.

Definition

GDP is measured as gross value added in market prices. Data on GDP at current prices are sourced from the OECD National Accounts Statistics (database). For international comparisons, these data are converted to a common currency, US dollars, using Purchasing Power Parities (PPPs). Unlike currency exchange rates, the PPPs are currency converters that control for differences in the price levels between countries, making possible to compare absolute volumes across them (Chapter 8. ).

Comparability

For Colombia, indicators are based on the System of National Accounts 1993 (1993 SNA). For the Russian Federation, the indicators are on a 1993 SNA basis for data up to 2010 and 2008 SNA thereafter. For all the other countries, the indicators presented are based on the 2008 SNA. The 2008 SNA includes items such as the capitalisation of research and development (R&D) and military weapons systems which increase GDP levels (Chapter 8. ).

Population estimates are comparable across countries and are also sourced from the OECD National Accounts Statistics (database). However, some care is needed in interpretation as countries like Luxembourg and, to a lesser extent, Switzerland, have a relatively large number of frontier workers that contribute to GDP but are excluded from the population figures. In this context, cross-country comparisons of income per capita based on gross or net national income are also relevant.

References

OECD National Accounts Statistics (database), http://dx.doi.org/10.1787/na-data-en.

OECD Productivity Statistics (database), http://dx.doi.org/10.1787/pdtvy-data-en.

OECD (2001), Measuring Productivity – OECD Manual, http://dx.doi.org/10.1787/9789264194519-en.

Figure 2.5. GDP per capita convergence, 2001-2017
Percentage change at annual rate (Y-axis); US dollars, current prices, current PPPs (X-axis)
Figure 2.5. GDP per capita convergence, 2001-2017

 StatLink http://dx.doi.org/10.1787/888933968345

Figure 2.6. Gaps in GDP per capita
As a percentage of the United States (USA=100), constant prices and constant PPPs
Figure 2.6. Gaps in GDP per capita

 StatLink http://dx.doi.org/10.1787/888933968364

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