Peaks vs Components

We analyze the cross‐national distribution of gross domestic product (GDP) per capita and its evolution from 1970 to 2009. We argue that peaks are not a suitable measure for distinct convergence clubs/equilibria in the cross‐country distribution of GDP per capita, because the number of peaks is not invariant under non‐linear strictly monotonic transformations of the data such as the logarithmic transformation. Instead, we model the distribution as a finite mixture, and determine its number of components via statistical testing. We find that the number of components in the cross‐country distribution changes from three to two in the mid 1990s.