The Van at Blackfriars

In June the Taub Center published its annual portrait of Israeli society and the numbers told a story that should have been impossible. High technology workers in Israel now earn nearly three times the average wage in the rest of the economy, up from 2.2 times in 2012. Research and development spending runs at the highest ratio in the OECD, nearly double the average. Yet labour productivity across the economy as a whole remains low relative to comparable high income countries, and the gap is widening. Israel has one of the most educated populations on earth, but in the OECD’s adult skills survey its average score sits below the mean. In the Arab population the deficit reaches a full standard deviation.

An economist called Steve Dowrick would have recognised this pattern immediately. He spent most of his career explaining why the forces that ought to make countries converge so often do not.

Before Dowrick became one of the most important growth theorists of his generation, he drove a van. He was a young Dubliner, freshly out of the Quaker school in York, and he had been offered a scholarship to read theoretical physics at Cambridge. But before beginning, he spent a year at Blackfriars Settlement in Southwark, driving a van for a project called Workshop for the Disabled. The streets were narrow. The poverty was not.

That year changed everything. When Dowrick did arrive at Cambridge, he abandoned physics for the social sciences. A decade later he returned to study economics, met the Australian social scientist Deborah Mitchell, and followed her to Canberra. For nearly thirty years, from a quiet office at the Australian National University, he asked one question in various forms: why do some countries catch up and others fall behind?

His answer, delivered in a landmark 1989 paper in the American Economic Review with Duc-Tho Nguyen, was deceptively simple. Among OECD economies between 1950 and 1985, income levels were converging. Countries that started poorer grew faster. The mechanism was technology transfer, trade openness, and investment in education. The income gap was closing at a measurable pace. The paper became one of the most cited in the field.

But Dowrick was never a naive optimist. Together with Brad DeLong of Berkeley, he later examined the boundaries of what economists call the “convergence club”, the set of economies where technology transfer and education were powerful enough to push productivity toward the industrial core. The club had been very small in the nineteenth century. Britain, Belgium, the northeastern United States. It expanded, but not universally. Africa was falling further behind. Convergence was the exception in world economic history, not the rule. And even inside the club, membership did not guarantee that every part of the economy would converge at the same speed.

Israel joined the OECD in 2010, its 33rd member. In Dowrick’s framework, this was a country entering the convergence club on textbook terms: human capital investment, technology transfer, institutional openness. Six thousand technology firms. A defence innovation pipeline that doubles as a startup incubator. The engine looked right.

In a second major paper in the American Economic Review, this time with John Quiggin in 1997, Dowrick showed why looking right is not enough. The purchasing power parity data used to compare living standards across countries was subject to systematic substitution bias. Standard methods overstated the incomes of the poorest nations and understated true global inequality. When you measured properly, the world was further apart than the headline numbers suggested. Measurement, Dowrick insisted, was not an accounting exercise. It was a moral one.

The same principle applies inside a single country. Israel’s headline GDP growth has been strong. But when the Taub Center disaggregated the numbers, the convergence story fractured. The technology sector operates at the global frontier. The rest of the economy does not. The wage premium for tech workers has widened steadily for more than a decade. High technology employment itself has stagnated since 2023. The people inside the engine are accelerating. The people outside it are watching the gap grow. In Dowrick’s terms this is conditional convergence at the sector level: the conditions that enable catching up are present for part of the population but structurally absent for the rest.

That structural absence is not mysterious. The OECD’s 2025 economic survey of Israel named the levers plainly: infrastructure gaps, educational outcomes, and labour market participation among ultra-Orthodox and Arab citizens. These are precisely the variables that Dowrick spent his career identifying as the determinants of convergence. His insight was that the gap between those who catch up and those who do not is manufactured, not inevitable. The levers are identifiable. The question is whether anyone will pull them.

Steve Dowrick died of brain cancer on 3 August 2013. He was sixty. In his final months, the nursing staff would check his alertness by asking who the Prime Minister was. In June 2013 he replied that it was Julia Gillard at the moment, but to ask him again tomorrow and he would probably have a different answer, and it would still be correct.

The van at Blackfriars is long gone. Dowrick’s office at the ANU has been reassigned, the books packed, the door closed behind whoever came next. I knew him in that corridor. But the question he carried out of that van remains the central question of development economics. It is certainly the central question for a country that has entered the convergence club only to discover that parts of its own population were never issued a membership card at all. The room is not empty. It is unevenly occupied. And that, Dowrick would have said, is the harder problem.

Dowrick’s Work Applied to Current Context