A study on the model of economic growth convergence in developing regions: an empirical analysis from Henan Province, China

Abstract

In this paper, an empirical analysis is proposed by employing a regression-based convergence test, which was first introduced by Phillips and Sul. Unlike most related studies, this approach allows examining for evidence of club convergence and enables to endogenously identify groups of counties that converge to different equilibria. The results obtained in this paper support the existence of convergence clubs, indicating that 108 counties of Henan Province in China form four separate groups within which income per capita dispersion is decreasing over time. Moreover, results from an ordered logit model suggest that differences in initial income, physical capital, government intervention, geographical agglomeration, and topography factor among these counties have played vital roles in determining club membership. The most important conclusion of this paper is that the structural characteristics and infrastructure level do not contribute to determining club membership, and neighbors’ effect is also not a decisive factor. Particularly, counties which belong to Central Henan Urban Agglomeration are more likely to fall into a club with a higher mean income per capita. The findings in this paper may have significant policy implications for developing regions.