Convergence theory and conditional income convergence among sub‐Saharan African countries

Abstract

AbstractThis article examines the hypothesis of conditional convergence in income per person for sub‐Saharan African (SSA) countries over the most recent twenty‐five‐year period, 1990–2014, including examining the effects of new conditioning variables. This study uses new data from the Penn‐World Table 9.0 on per capita income and income growth which recently became available in purchasing‐power‐parity (PPP$) 2011 dollars. This is the first article to use this data to research convergence of per capita income in SSA. The study also identifies new conditioning variables and includes them in the econometric model of growth. The main results are for the largest 35 SSA countries, and they include: Average per capita income in 2011 PPP$ grew at 1.6% over the period of 1990–2014; and conditional convergence is occurring, that is, countries lagging behind in 1990 grew faster. Further, instrumenting the starting year value of per capita income increases the rate of convergence by 50%. The strongest finding throughout was for share of labor in agriculture, indicating that countries with a larger share of agriculture in 1990 grew slower. It also finds that countries located on the ocean and with a higher literacy rate tend to grow faster, while countries with higher life expectancy grew slower. External support for new agricultural technology or increased nutrition and food availability that increases agricultural productivity would reduce the share of labor in agriculture and increase future growth performance.