Productivity convergence across economic activities in Ecuador: What about the mines and quarries sector?

Abstract

The convergence hypothesis establishes that the least developed economies tend to grow faster than the developed economies, which implies that they will decrease their disparities over time. This article seeks to verify, through different convergence tests, to determine if in Ecuador the disparities between the economic sectors have decreased over time. For this, we use data, such as the Gross Value Added (GVA) and employment data, in the period 1991 - 2016. Using the standard deviation of each year, we analyse the sigma convergence. Then, using the Ordinary Least Squares method, we run some regressions to determine the beta convergence. In addition, unit root tests are carried out for a panel that consists on the productivity of different economic sectors in 26 years. Likewise, this research analyses the convergence hypotheses using the method proposed by Bernard and Durlauf with the same data panel. The results obtained with the OLS regressions and the unit root tests show the existence of convergence between the economic sectors, while the results obtained with the method proposed by Bernard and Durlauf (1995) present evidence of a divergence process.