Interregional inequality in Africa, convergence, and multiple equilibria: Evidence from nighttime light data

Abstract

AbstractUnderstanding the dynamics of interregional inequality in Africa is important when formulating development policies. In this paper, we investigate the convergence pattern of regional inequality within 49 African countries over the period 1992–2012 using satellite night‐light‐based inequality proxies. We find evidence of multiple equilibria in regional income inequality. Countries belonging to clubs with high regional inequality level do not show any tendency to converge toward the clubs with low regional inequality, indicating that these countries are indeed stuck in regional income inequality traps. The idea of regional income inequality traps is also confirmed by a distributional dynamic analysis that uncovered evidence of regional income inequality persistence with a limited degree of mobility between convergence clubs. From the convergence analysis, we found that the initial conditions in the economic development, natural resource rent, urbanization, political institutions, development aid programs, and infrastructure are very important determinants of regional income inequality. Our findings provide policy makers some direction for future economic policies.