Market Integration and Regional Divide: What role for trade and ICT?

Globalisation of markets and acceleration of technological innovation have changed the way economic systems evolve all over the world. We examine the existing empirical evidence on the way these economic transformations are impacting on growth. First, we survey the modern debate on convergence, focusing on the empirical evidence on cross-country differences in growth rates and in particular on the issue of global and local convergence (growth clubs). Secondly, we examine the conditions under which the two major pillars of globalization, trade liberalization and technology diffusion, may induce perverse effects on economic growth inducing “underdevelopment traps”, “polarization” and inequality. In the last section we highlight the reasons why a deficit of strong national and international institutions, a lack of investment in human and social capital and of cooperation among regulatory authorities, are to be considered as the main problems to be solved to fight against perverse effects of globalization.