countries and 35 sectors for 1995-2009. We find South-North convergence of energy and labor intensities, an energy bias of … import-driven convergence and no robust difference between imports of intermediate and investment goods. Accordingly, trade …

-North convergence based on North-South technology diffusion through intermediate goods trade is guaranteed if the knowledge effect … dominates the productivity effect. Moreover, a larger Southern market expands the area of convergence and can prevent divergence … convergence is desirable for both, the South and the North. …