Long-run convergence in manufacturing and innovation-based models

Most studies of comparative productivities fail to find evidence of convergence in OECD manufacturing despite major economic growth theories predicting convergence. Using manufacturing data for nineteen OECD countries over the period from 1870 to 2006, this study finds strong evidence of unconditional Beta-convergence as well as sigma-convergence. Panel data estimates suggest that the convergence has been driven by domestic R D, international R D spillovers, and financial development as predicted by Schumpeterian growth theories.