Output Convergence and International Trade: Time-Series and Fuzzy Clustering Evidence for New Zealand and her Trading Partners, 1950 – 1992

Abstract

Using historical time-series data, we test for convergence and common trends in real per capita output for New Zealand and her four major trading partners. Both bivariate and multivariate time-series methods are used, and we also implement the fuzzy c-means clustering algorithm as a new method for detecting convergence. The results of our time-series analysis accord with earlier studies – we find limited evidence of (only bivariate) convergence, but ample evidence of a small number of common trends. In contrast, our fuzzy clustering analysis reveals very strong evidence of a particular form of output convergence when the five trading countries are considered as a group.