NEOCLASSICAL NATURE AND BACKGROUND OF BETA CONVERGENCE BETEWEEN COUNTRIES/REGIONS

Abstract

The methodological basis of beta-convergence concept (which is based on the neoclassical model of growth) is studied. According to the theory of convergence, there is a set of countries (regions, provinces) that are members of the so-called "convergence clubs" i.e. in these countries (or regions) there is the process of convergence of their social and economic development towards more developed countries (regions). Numerous empirical studies of scientists around the world on this topic are currently a powerful basis for the development of appropriate regional economic policy by governments. The period since the 1980s is characterized by increased interest of researchers in the convergence processes of regions and countries, as such processes have important positive consequences for the welfare of the population, economic growth and are the basis for effective regional policy. Today, a large number of scientists from around the world annually publish dozens of research results based on the use of convergence, which is based on a non-classical model of growth. However, these studies should take into account the nature of non-classical growth models, their shortcomings and make appropriate modifications to the classical model. Given the above in this context it is common to analyze the features of the neoclassical model, the main of which is the non-competitive nature of the ideas underlying the technology. An analysis of the features of the neoclassical model of growth, the main of which is the non-competitive nature of the ideas underlying the technology. It was found that the level of growth of the economy, which is below the steady state, is high and gradually decreases over time. The author proves the existence of certain conditions for the usage of beta-convergence in empirical studies. First, in the models, the growth rate of per capita income and its corresponding initial value are usually inversely dependent, and therefore the testing of the hypothesis of convergence of countries/regions should be based on the assessment of such dependence. Second, the Cobb-Douglas production function must have the property of a permanent effect of scale, which requires its empirical study.