Milanovic, Branko2014-08-012014-08-012003-01https://hdl.handle.net/10986/19178Some economists have argued that the process of disintegration of the world economy between the two world wars led to income divergence between the countries. This is in keeping with the view that economic integration leads to income convergence. The paper shows that the view that the period 1919-39 was associated with divergence of incomes among the rich countries is wrong. On the contrary, income convergence continued and even accelerated. Since the mid-19th century, incomes of rich countries tended to converge in peacetime regardless of whether their economies were more or less integrated. This, in turn, implies that it may not be trade and capital and labor flows that matter for income convergence but some other, less easily observable, forces like diffusion of information and technology.en-USCC BY 3.0 IGOAVERAGE GROWTH RATEAVERAGE TARIFFAVERAGE TARIFF RATESBILATERAL ARRANGEMENTSBILATERAL TRADEBILATERAL TREATIESBLOC IMPORTSBONDSCAPITAL FLOWSCOMMUNITY COUNTRIESCONSTANT PRICESCOUNTRY-SPECIFIC EFFECTSCURRENCYCURRENT ACCOUNTCURRENT ACCOUNT BALANCECURRENT ACCOUNT DEFICITDEPENDENT VARIABLEECONOMETRIC PROBLEMSECONOMIC ACTIVITYECONOMIC GROWTHECONOMIC INTEGRATIONECONOMIC POLICYECONOMIC SURVEYSECONOMIC THEORYECONOMISTSEMPIRICAL EVIDENCEEMPIRICAL SUPPORTENDOGENOUS GROWTHENDOGENOUS GROWTH MODELEVIDENCE OF CONVERGENCEEXCHANGE RATEEXCHANGE RATESEXPORTERSEXPORTSFINANCIAL POSITIONFOREIGN INVESTMENTSFOREIGN TECHNOLOGYFREE TRADEFREER TRADEGDPGDP PER CAPITAGINI COEFFICIENTGROWTH MODELGROWTH RATEGROWTH RATESIMPORTSINCOMEINCOME CONVERGENCEINCOME DIFFERENCESINCOME GAPSINCOMESINDUSTRIALIZATIONINEQUALITYINVESTMENT RATEKNOWLEDGE SPILLOVERLESS DEVELOPED COUNTRIESLIVING STANDARDSLOCAL MARKETNEGATIVE COEFFICIENTNEGATIVE SLOPENEIGHBORING COUNTRIESNON-TARIFF BARRIERSOILOPENNESSPER CAPITA GROWTHPOLICY RESEARCHPOOR COUNTRIESPOOR COUNTRYPOPULATION GROWTHPRIMARY GOODSPRODUCTIVITYPROTECTIONISMPURCHASING POWERQUANTITATIVE RESTRICTIONSREAL WAGESREGIONAL BLOCSREGRESSION ANALYSISSAVINGSSERIES DATATARIFF BARRIERSTARIFF RATETARIFF RATESTECHNOLOGICAL PROGRESSTRADE BARRIERSTRADE INTEGRATIONTRADE VOLUMESTRADE] AREASTRADING BLOCSVOLUME OF TRADEWAGE CONVERGENCEWAGESWORLD ECONOMYWORLD TRADE10.1596/1813-9450-2941