In a two-region model, we formalize Kindleberger's idea that wealth
breeds first more wealth, and then decline: when one region leads,
its inhabitants develop consumption habits incompatible with the
necessary investment in knowledge to remain the leader. This gives
the other region a window of opportunity to gain economic primacy.
The theory suggests that differences across regions that have
similar characteristics may persist even if physical capital flows
from rich to poor regions. We study patterns of overtaking,
alternating primacy, irreversible decline, and monotonic
convergence, according to the initial dispersion of knowledge and
the strength of consumption habits. Even though exogenous factors
may matter on some occasions, we show that they are not necessary
to reverse economic leadership.