We present a multi-country theory of economic growth in which countries are connected by a network of mutual knowledge … knowledge throughout the world explains a period of increasing world inequality after the take-off of the forerunners of the … industrial revolution, followed by decreasing relative inequality. Knowledge diffusion through a Small World network explains the …

The aim of this paper is to examine the impact of inequalities and economic convergence on the efficient discount rate … than unity, an increase in economic convergence always raises the efficient discount rate. In a realistic calibration … exercise, we show that the effect of economic convergence is to triple the discount rate, from less 2% to more than 6% …

-degenerate world income distribution. In accordance with the empirical literature, I find that country characteristics such as the … policies such as subsidies to innovation investments explain a country's position in the eventual world income distribution …. Club convergence in growth rates can be traced back to a country's openness and to a minimum required level of human …