Empirics of convergence in industrialisation and their determinants: global evidence

Abstract

This study examines the convergence club in industrialisation by using an algorithm developed by Phillips and Sul. We used 183 countries for the period between 2000 and 2018. We also investigated the dynamics of the determinants possibly driving the convergence/divergence clubs of the countries. The convergence algorithm results reveal that there is divergence in industrialisation for the overall sample, which implies that less industrialised economies are not catching up with the industrialised economies within the sample period. The club merging algorithm results identified six final clubs of which economic, demographic, governance and geographic variables play a significant role in the likelihood of a country belonging to a particular final club. This study found that globally, the process of convergence in the industrialisation process is yet to echo desirable emanations of industrial/manufacturing policies sharing similar features, but the narrative seems to be different when the algorithm forms clubs.