Income Convergence Across Asian Economies: An Empirical Exploration

Abstract

ABSTRACT This article investigates the growth and regional disparity scenario that the Asian economies have been facing in the contemporary period. It attempts to investigate whether or not there exists income convergence across Asian economies over the period of 1990 to 2017 and also identifies the potential determinants. It empirically investigates the role of per capita income levels for the Asian countries with the help of β-convergence, σ-convergence and club convergence estimation methods. Using a panel data framework, this article investigates the possible determinants of the conditional convergence by undertaking the problem of endogeneity through different econometric models. The results confirm that the income gap among the countries appears to decline over time and there is a possibility of having unconditional convergence in the long run. The analysis supports the view of trade liberalization and recommends investing in the human capital and infrastructure to narrow down the regional disparity in Asia.