Thesis on Convergence Theory: Frontiers of Real Convergence of a Transition Economy

One of the basic issues of growth theory is the analysis of real convergence. Modern growth theories are able to predict divergence between economies that is caused by the differences in technological progress, human capital, or institutions. Henceforth, regardless which of the recognized growth models we take into consideration (aggregate as well as sectoral), all have an important common characteristic: they predict the divergence between economies on the basis of their differences in initial conditions at the aggregate level. The focus of this book is the opposite to that of the existing solutions. We develope a growth model that enables us to predict the divergence between economies where the assumption on the homogeneity of initial conditions at the aggregate level is fulfilled. For this purpose we develop an original growth model that permits us to predict real divergence of labor productivity between economies, although all the regarded economies experience convergence in technology, human capital and institutional organization.