Convergence Clubs in Minas Gerais State, Brazil

Abstract

This paper investigates the hypothesis of income convergence clubs among 722 municipal districts in Minas Gerais, evaluating the role of important economic and social variables, such as human capital, distribution of income and poverty, size of the economy, income and regional location in the characterization of those convergence clubs, from 1985 to 1997. Initially, a cluster analysis is used with the objective of forming homogeneous municipal districts groups with respect to those variables. It basically identifies different patterns of economic and social development among the municipal districts of Minas Gerais. The cluster analysis had detected 14 groups of municipal districts. After that, convergence analysis had found 9 convergence clubs (among those 14 groups) using the beta convergence criteria. The income equalization trend was confirmed by the sigma convergence test in most convergence clubs. Among the 14 groups, 5 groups did not participate in the income convergence process. The end of educational, income distribution and poverty discrepancies among municipal districts seems essential for a broader convergence process.