Economic integration and income convergence in the EU and the ASEAN

Abstract

Abstract. In this paper, examine per capita income convergence among the countries of the EU and the ASEAN during 2000-2014 using both beta and sigma convergence and theil index of inequality in order to to explain the process of structural change contributing to the process of income convergence. Our analysis of theil index of inequality indicates that the inter-country inequality, in general, has been decreasing for GDP in the EU and the ASEAN, which is in line with the findings of β- and σ- convergence for these two groups of countries during 2000-2014. While in the case of EU, reduction in inequality in the industrial sector has positively affected the reduction in inequality in income; for ASEAN, industrial and services sector have contributed to income convergence. Keywords. Convergence, EU, ASEAN, Theil Index of Inequality. JEL. O00, O10, O40.