Are there Economic Convergence Clubs in Latin America?

Abstract

Are there Economic Convergence Clubs in Latin America? Domingo Rodríguez-Benavides, Francisco López-Herrera, Francisco Venegas-Martínez Abstract The aim of this paper is to analyse the hypothesis of convergence in the Gross Domestic Product (GDP) per capita in Latin America in the period 1950-2010 through the nonlinear coefficients model variants of a single factor in the time proposed by Philips and Sul (2007). This approach has the virtue of being extremely flexible to model a significant amount of transition paths to convergence; besides, it does not requires an assumption about the non-stationary of the series of the panel of analysis. We found evidence of relative convergence to four groups or clubs of countries, when the series of GDP per capita have not been filtered, and we have not found evidence of convergence when the series are previously filtered through the Hodrick-Prescott filter, except for Bolivia and Nicaragua. These results can be construed into evidence that groups of countries in a region are subject to common external shocks more than a process of convergence between them. Full Text: PDF DOI: 10.15640/jeds.v2n3a8