Economic vulnerability and its effects on conditional convergence clubs in the semi-arid region of Pernambuco, Northeast Brazil

Abstract

This paper addresses inequalities in the economic growth of municipalities in Pernambuco, one of the states in Northeast Brazilian most vulnerable to climate change. The study uses longitudinal data from the 2010 s to identify economic convergence clubs. This paper estimates the role of determinants of economic growth by club. The main results reveal the existence of several convergence clubs with different investment sensitivities to production. With the same amount of investment, the municipalities in the semi-arid region are less sensitive in developing their economies compared to other regions. These findings suggest that disparities among semi-arid and non-semi-arid areas will increase over time without compensatory policies.