Convergence and Spillover Effects in Africa: A Spatial Panel Data Approach

Abstract

This paper re-examines the question of beta convergence process among 45 African countries during the period 2000–2015, taking into account the existence of spatial dependence and spatial spillover effects. We use a spatial panel data approach to control both individual effects and interaction among geographical units. The exploratory spatial data analysis detects strong spatial dependence and clusters of high per capita income in northern, central and southern Africa. Our empirical results find the existence of beta convergence and suggest that dependence between economies has an adverse impact in the convergence speed for African countries. We also find the existence of spatial spillover effects. This result suggests that in Africa, having neighbours with higher levels of initial per capita income leads to higher growth rates.