Economic clustering of countries in the Asia‐Pacific region

Abstract

PurposeThe purpose of this paper is to examine the possibility of using non‐income indicators and the self‐organizing map (SOM) approach as an alternative analytical tool to map countries' welfare status.Design/methodology/approachUsing data from 27 countries of the East Asia‐Pacific region, a welfare analysis based on non‐income indicators is implemented. The set of the selected indicators employed includes measures of social indicators as well as indicators related to the overall development framework. The empirical approach of the present paper can be described as a two‐stage procedure. In the first stage, the standard incremental SOM algorithm has been used and the two‐dimensional map produced in a hexagonal grid is presented together with the weight maps. In the second stage, the k‐means methodology has been used to cluster the prototypes produced by the SOM.FindingsThe classification produced by the two‐stage approach of the empirical analysis is compared with the baseline World Bank's income categories (based on Gross National Income per capita) offering an opportunity to assess the usefulness of non‐parametric approaches that are based on non‐income indicators vis‐à‐vis World Bank's approach in analysing welfare outcomes. The emerging picture of the empirical analysis supports the potential of the SOM as a useful and prolific analytical tool in mapping welfare outcomes.Originality/valueThis study proposes a methodology beyond the conventional ordinal rankings of the welfare of the countries based on non‐income indicators and the SOM.