Foto: Sauļus Žiura, F64/BFL
My most recent post tried to warn against what I consider a wrong belief, namely that poorer countries invariably will catch up with richer ones. It is also a dangerous belief since it might lead to complacency among policy makers - much as I think one could, at least partly, characterize the situation during the boom years where some seemed to believe that income convergence was just a question of time.
Allow me here just three examples of a) why convergence is not automatic and b) why it may not happen at all.
First example. Many of us will believe that spending on research and development (R&D) is crucial for a rich society. Unfortunately, as Figure 1 shows, Latvia has an awful record in terms of this indicator.
Figure 1: Spending on research and development (R&D), euro per inhabitant, 2011
