Trade and Convergence: A Dynamic Panel Data Approach

The objective of this paper is to provide, theoretically and empirically, an interpretation of comovement between the scale of an economy and its growth rate. I paid special attention to human capital accumulation and international trade environment and emphasized their spillover effects on growth and convergence among countries. I employed a technique using a cross-sectional and time series panel. The estimations in my empirical models were done using the nonlinear least-squares method in which I applied a dynamic procedure for an economy along its balanced growth path. I arrived at mixed results. The empirical results show that international spillover effects of human capital accumulation and intermediate goods production have positive and significant effects on the growth process of a nation. The national level of human capital, however, has negative and insignificant effects on this process.