Club Clustering Research Articles

Sectoral Convergence Trends in per Capita Energy Use Among US States

This research studies the convergence hypothesis in per capita energy consumption across 51 US states, not only at an aggregated level but also at a sectoral one during the period 1960–2018. As regards methodology, we applied Phillips and Sul’s framework, and as a robustness test, we used the von Lyncker and Thoennessen calculation. Initially, the findings unveil the rejection of full panel convergence at total energy consumption and at the sectoral level, but when it comes to subgroup analysis, a crucial number of clubs are detected. By and large, for the total energy consumption per capita sample, the club clustering algorithm shows the presence of four convergent clubs and one divergent group. Concerning the commercial sector, the absence of a divergent group is found, while we can detect two subgroups. The convergence findings of the electric power sector divulged four subgroups and one state with divergent action. As regards the industrial sector, the outcomes reported seven clubs and one divergent group, while three clubs and one divergent group emerged in the residential sector. Lastly, with respect to the transportation sector, four clubs and one divergent group are revealed. It could be said then that policy implications are substantial and valuable not only for the convergent states but also for the divergent states. JEL Classifications: C33, O47, Q4, Q40

Convergence analysis of artificial intelligence research capacity: Are the less developed catching up with the developed ones?

AbstractThis study examines whether less developed countries are catching up with developed ones using the log t convergence technique (LCT) and the dynamic spatial ordered probit (DSOP) model. The findings revealed that first, there is no overall convergence in AI research capacity. Second, club clustering analysis showed convergence in four of the five groups of countries on AI research output and in three of the four groups on AI patent grants. Third, the countries are experiencing a slow divergence process in AI research capacity. Fourth, the region, income group and cluster of the countries are influencing the convergence process.

Trends in household out-of-pocket health expenditures and their underlying determinants: explaining variations within African regional economic communities from countries panel data

BackgroundThe persistently high out-of-pocket health spending (OOPHE) in Africa raise significant concern about the prospect of reaching SDG health targets and UHC. The study examines the convergence hypothesis of OOPHE in 40 African countries from 2000 to 2019.MethodsWe exploit the logt\\documentclass[12pt]{minimal} \\usepackage{amsmath} \\usepackage{wasysym} \\usepackage{amsfonts} \\usepackage{amssymb} \\usepackage{amsbsy} \\usepackage{mathrsfs} \\usepackage{upgreek} \\setlength{\\oddsidemargin}{-69pt} \\begin{document}$${\ ext{log }}t$$\\end{document}, club clustering, and merging methods on a panel of dataset obtained from the World Development Indicators, the World Governance Indicators, and the World Health Organization. Then, we employ the multilevel linear mixed effect model to examine whether countries' macro-level characteristics affect the disparities in OOPHE in the African regional economic communities (RECs).ResultsThe results show evidence of full panel divergence, indicating persistent disparities in OOPHE over time. However, we found three convergence clubs and a divergent group for the OOPHE per capita and as a share of the total health expenditure. The results also show that convergence does not only occur among countries affiliated with the same regional economic grouping, suggesting disparities within the regional groupings. The findings reveal that countries' improved access to sanitation and quality of governance, increased childhood DPT immunization coverage, increased share of the elderly population, life expectancy at birth, external health expenditure per capita, and ICT (information and communication technology) significantly affect within-regional groupings’ disparities in OOPHE per capita. The results also show that an increasing countries’ share of elderly and younger populations, access to basic sanitation, ICT, trade GDP per capita, life expectancy at birth, childhood DPT immunization coverage, and antiretroviral therapy coverage have significant impacts on the share of OOPHE to total health expenditure within the regional groupings.ConclusionTherefore, there is a need to develop policies that vary across the convergence clubs. These countries should increase their health services coverage, adopt planned urbanization, and coordinate trade and ICT access policies. Policymakers should consider hidden costs associated with access to childhood immunization services that may lead to catastrophic health spending.

Energy justice and gaps in sustainable development: A convergence testing and clustering study

The purpose of the study is to examine the dynamics of carbon emissions inequality and its effect on energy justice, whether carbon footprints have increased or decreased across countries, sectors, and households over time. We use convergence analysis, which is a methodology that effectively reveals carbon footprint dynamics. Our database contained carbon footprint data from different sectors across 180 countries between 1980 and 2020. We account for the non-linearity of the carbon footprint convergence or divergence process over time and individual heterogeneity across countries and sectors (data pre-filtering, carbon footprint convergence testing, and club clustering). Our results demonstrate a significant disparity in carbon footprints across various sectors and countries, especially among the top 1 % of earners. The wealthiest individuals worldwide have not converged towards a common trajectory, indicating high levels of carbon footprint inequality. This investigation assumes that the carbon footprint convergence or divergence process is not linear over time, allowing for fluctuations in carbon emissions inequality. Future research may explore the factors contributing to this non-linearity and its implications for energy justice. Our findings highlight global cooperation's importance in promoting sustainable production practices and a fair distribution of energy-related responsibilities. Energy production and consumption burdens are not equitably distributed, posing a significant challenge to achieving energy justice. This study provides a comprehensive understanding of the dynamics of carbon emissions inequality and its impact on energy justice. It employs a unique methodology and a multidimensional database, providing new insights into the carbon footprint disparity across sectors and countries.

Carbon (CO2) emission and food availability convergence in the Niger Basin region: Insight from a club clustering algorithm

The study employed the Phillips and Sul log-t convergence test to analyse the degree of convergence for the Niger Basin region (NBR) countries in terms of per capita carbon emission and food availability. We found that, between the years 1986 and 2020, the Niger Basin region produced 13.5% less food per person than it did during the base period of 2004 to 2006. This study also found a strong convergence among the NBR countries on per capita food production. The result for the region’s convergence of per capita carbon emission was rejected. The non-convergence of the entire sample, and the presence of the different subgroup convergence clubs for per capita CO2 emission for the region, implies that individual factors characterise the NBR countries in terms of per capita CO2 emissions, which in turn determine an idiosyncratic course of their transition path for per capita CO2 emission policies. Considering that the transboundary river basin links nine countries, this study recommends that the NBR countries formulate and implement CO2 emission policies based on cluband country-specific policies to achieve convergence in relation to a concerted food security threat facing the region.

A Study of Trends in Low-Energy Development Patterns in China: A Data-Driven Approach

China is currently undergoing a transition towards high-quality economic development, and the industrial structure is being optimized. However, there are still regional imbalances in economic development and energy consumption. Therefore, it is necessary to investigate whether the disparities in electricity intensity between provinces and industries can converge over time. This paper investigates the trend towards low-energy consumption in China and verifies the club convergence of electricity intensity across provinces and industries in China using a data-driven log t-test and club clustering algorithm. The study innovatively finds that the convergence of electricity intensity is more pronounced in the tertiary sector. The value added of electricity consumption in the tertiary sector is closely related to the level of regional economic development, further indicating that the pattern of low-energy development is closely related to factors such as the geographical location of the province, regional radiation capacity, and industrial structure. In order to accelerate low-energy development in China, the paper proposes policy recommendations related to low-energy development to improve the quality of China’s economic development.

Regionalization of Latin America based on asymmetries in the absorptive capacity of countries

Latin America has a rich history of regional integration agreements with no sustained success. One possible explanation is that these agreements mainly depend on political considerations and do not have a solid basis at the level of private agents. Opposite to the previous literature on regionalism, a method founded on asymmetric economies is proposed in this work. Based on the identification of sources and manifestations of asymmetries, a club clustering proposal of countries is provided. The study involves 67 variables, 20 countries from Latin America, and a period between 1985 and 2008. The results reveal that the existing agreements are not based on the countries' asymmetries, then, the achievement of a successful continental integration is unlikely under the current circumstances.

The role of Covid-19 in bank profitability convergence: evidence from a sample of US banks and club clustering

ABSTRACT This paper explores whether there is convergence of bank profits in the US banking sector across the periods before and during the COVID-19 pandemic. For the first time in the literature, it provides empirical evidence from 86 largest banks in the sector by making use of certain convergence methods. The empirical (robust) findings document that over the pandemic crisis, bank profits illustrated a more convergence pattern, while certain explanatory determinants of bank profitability, such as non-performing loans and digital technology, seem to stronger impact on higher convergence during the pandemic crisis.

The Convergence in Greenhouse Gas Emissions Across G-7 Countries

Environmental degradation, such as climate crisis, global warming, etc., is one of the crucial issues for countries. Studies in the literature analyze the convergence in environmental degradation regarding the environmental convergence hypothesis using different indicators such as carbon dioxide emissions, ecological footprint, etc. to identify the differences in environmental quality across countries. This study tests the environmental convergence hypothesis for G-7 countries over the period 1997-2018. To do so, we use greenhouse gas emissions per capita as an indicator of environmental degradation and apply non-linear dynamic factor model developed by Phillips and Sul (2007). According to the results, countries do not converge to a single equilibrium point. However, Phillips and Sul (2007) convergence methodology allows us to identify possible convergence clubs. The club clustering algorithm identifies three convergence clubs, each converging to a different steady-state. Club 1, which converges to higher greenhouse gas emissions per capita level, includes Canada and United States, whereas Club 2 includes Germany and Japan, and Club 3 includes France, Italy, and the United Kingdom. The results confirm that the that the environmental convergence hypothesis does not hold for G-7 countries.

Testing for Convergence Innovation and Club Clustering in Selected Economies 1995-2017

Innovation convergence is a deterministic process resulting from the change in micro and macro innovation determinants. It is characterized by firms' search for innovative opportunities in other economic sectors and in their development from mining through heavy industry to material processing sector, discovering new technologies that connect individual products to a more integrated global system, diversifying, ensuring technical scope growth, and start-ups contributing to new managerial leadership. The aim of this study is to contribute to our knowledge of convergence innovation by providing empirical evidence on it. To this purpose, we use a nonlinear time-varying factor model to test for convergence innovation and countries' club clustering. For the sample of 29 countries from 1995 to 2017, we identify two significant convergence clubs and one divergent group (Cyprus, Czech Republic, and The Netherlands). The empirical evidence indicates that innovation singularity could appear as a significant barrier and limiting factors for firms' and countries' growth in the future. Design and new product development trends in these countries follow a different decoupling path from the rest of the sample. Policymakers and practitioners should carefully evaluate innovation determinants and constraints (decoupling drivers) in setting up innovation policies on a micro and macro level.

Stochastic and Club Convergence in Real Wages in European Union: Evidence from Aggregate and Sector Level Data

The paper examined real wage convergence across 27 European economies, at aggregate and sectoral levels, using the panel unit root tests of stochastic convergence and the club clustering procedure. Convergence was absent for a panel as a whole, but present within the clubs. In most sectors, the common component of the relative wages was stationary, while idiosyncratic component contained unit roots, suggesting the country- and sector-specific drivers of convergence and only transitory effects of exogenous forces. The most pronounced club convergence was observed in the sectors characterized by significant labor mobility, knowledge intensity and speed of technological change.

Has the COVID-19 pandemic converged across countries?

The outbreak of COVID-19 has induced economic and financial disruptions to global economies, consistent with those experienced during previous episodes of economic or financial crises. This study offers a critical perspective into the spread of the virus by investigating the convergence patterns of COVID-19 across 155 countries from March 2020 to August 2021. The club clustering algorithm is used to verify the convergence patterns of infection and death rates in these countries. The findings show that full panel convergence cannot be achieved indicating the presence of sub-convergent clusters. Cluster formation for death rates includes the Americas, Africa, the Middle East, and Asia, among others. To understand the factors driving these results, we analyse the determinants of the convergence process of COVID-19. The probability of belonging to a cluster with higher death intensity increases with being above the age of 65, poverty, and for female smokers while handwashing shows beneficial effect on case intensity.

European bank profitability: The great convergence?

Have euro area banks restored viability in the post-crisis era? We investigate profitability convergence for euro area banks over the period 2009–2020 using the concepts of β and σ convergence and a club clustering algorithm. Our evidence is consistent with a slow catch up of the weaker banks, but we also document that better performing banks converge towards a lower profit level, suggesting a ‘great convergence’ towards the middle. Moreover, we identify a cluster of banks exhibiting dismal profit dynamics, characterized by high cost-to-income and non-performing loans ratios, indicating the need for a restructuring of part of the euro area banking sector.

Hotel Revenue Convergence: Evidence Across Star Hotels in Chinese Provinces.

This paper analyses, for the first time, potential convergence patterns of hotel revenues across provinces in China. Through the club clustering methodology, the analysis uses a unique dataset of all hotels across all Chinese provinces. The findings document that these hotel revenues follow a diverging pattern on a national level, while a converging pattern is identified across certain provinces, thus forming specific clubs. When the analysis is extended to identify potential drivers for such diverging or converging behavior, the new results illustrate the role of productivity trends, management strategies and tax policies as those factors that drive such patterns. The results could be of substantial value, primarily for tourism policymakers to further improve the current framework of the Chinese hotel industry to introduce practices and policies that will allow the industry to catch up with the global market. Supplementary InformationThe online version contains supplementary material available at 10.1007/s11293-022-09745-6.

Long-term barriers to global fertility convergence

After WWII, the demographic transition exhibited features of convergence between developing countries and the forerunner countries with low fertility. Although today fertility is low in the majority of countries, significant differences persist. In this article, I study club convergence of fertility in 190 countries over the period 1950 to 2018. First, I apply a novel econometric method for convergence analysis and club clustering. I find no evidence of global fertility convergence, and I classify the 190 countries into four clubs. I further classify countries into two clubs at the beginning of the period and identify a club of countries transitioning from high to low fertility. Second, I interpret fertility convergence clubs as a feature of the long-term process of economic development and estimate an ordered probit model of the probability that a country enters one of three clubs characterized by high, medium, and low barriers to global fertility convergence. Here, the focus is on ancestral fundamental factors of diversity in economic development. Estimates show a statistically significant inverted U-shaped relationship between interpersonal population diversity and the probability of lower barriers, consistent with the literature on diversity and development. Estimates also highlight that genetic distance to the USA and years since the Neolithic transition to agriculture cause higher barriers to fertility decline.

Convergence in renewable energy sources and the dynamics of their determinants: An insight from a club clustering algorithm

In this article, the convergence in renewable energy sources is investigated for 183 countries spanning the years 2000 to 2018. We apply the convergence algorithm proposed by Philips and Sul, and use two measures of renewable energy sources, namely, renewable electricity output (% of total electricity output) and renewable energy consumption (% of total final energy consumption). We also investigate the dynamics of the determinants/factors possibly driving the convergence clubs of the countries via multinomial logit regression. The determinants were divided into macroeconomics, socio-economic, and institutional quality factors for the purpose of knowing the roles they play in the convergence process. Previous studies have failed to use the two measures of renewable energy sources concurrently, identify the determinants of the convergence process, and utilise the econometric approaches applied to achieve the objectives of this study. Hence, the contribution of this study. At the global level, the panel convergence results reveal that there is nonconvergence in renewable energy sources. Given the discrepancy in renewable energy sources and the energy challenges that many countries face around the world, this finding is unsurprising. The determinants that played a significant role in the likelihood of a country belonging to a final convergence club include agricultural value added, FDI, trade openness, land, ICT, population, and institutional quality. Overall, this study found that the process of renewable energy sources convergence process is yet to echo desirable emanations of energy sectors/policies sharing/moving in similar directions, but the narrative appears to be different when the algorithm form clubs.

Convergence or divergence patterns in income distribution across countries: A new evidence from a club clustering algorithm

Since globalisation accelerated in the early 1990s, income inequality has increased in most developed countries and in some middle-income countries, including China and India. Also, inequality has declined in most countries of Latin America and the Caribbean and in many Sub-Saharan African and South Asian countries. This observation corroborates the neoclassical models of convergence that predict that, in the long-run, income distribution will tend to converge across countries. In this study, I examined whether there has been convergence in inequality between 2000 and 2015. To this end, I constructed a large panel of Gini indices of 142 countries and tested for the existence of convergence clubs using the econometric methodology proposed by Phillips and Sul. The results indicate that there is no uniform convergence to one club. Instead, I found that countries’ income inequalities are converging into five different clubs. This finding is different from those reported by the few existing c ross-country studies on convergence in inequality. Furthermore, the analysis reveals strong evidence that between-club inequality increases, while within-club inequality decreases over the years. Between-club inequality is found to be determined by population growth, population density and the ratio of physical to human capital.

Exploring the convergence patterns of PM2.5 in Chinese cities.

Economic development and ongoing urbanization are usually accompanied by severe haze pollution. Revealing the spatial and temporal evolution of haze pollution can provide a powerful tool for formulating sustainable development policies. Previous studies mostly discuss the differences in the level of PM2.5 among regions, but have paid little attention to the change rules of such differences and their clustering patterns over long periods. Therefore, from the perspective of club convergence, this study employs the log t regression test and club clustering algorithm proposed by Phillips and Sul (Econometrica 75(6):1771–1855, 2007. 10.1111/j.1468-0262.2007.00811.x) to empirically examine the convergence characteristics of PM2.5 concentrations in Chinese cities from 1998 to 2016. This study found that there was no evidence of full panel convergence, but supported one divergent group and eleven convergence clubs with large differences in mean PM2.5 concentrations and growth rates. The geographical distribution of these clubs showed significant spatial dependence. In addition, certain meteorological and socio-economic factors predominantly determined the convergence club for each city.

Trends and convergence analysis of executive remuneration in the Indian banking industry

This paper empirically examines the trends and convergence in the remuneration of executive directors in the Indian banking industry and across bank groups from 2005 to 2018. The study adopts Barro et al 's (1991) σ- and β-concepts of convergence in the dynamic panel econometric specification and Phillips and Sul's (2007, 2009) club clustering algorithm to investigate the convergence in executives' remuneration. The empirical results show evidence of β-convergence in remuneration paid to bank executives, implying the existence of a catching-up phenomenon in pay levels in the Indian banking industry and across ownership groups. However, a significant decline in the dispersion in executive pay is not observed. The club convergence identifies two convergent clubs and one divergent club in the industry with a considerably huge gap in the average pay across clubs. Our study offers sound policy implications to promote ongoing governance reforms toward an optimal pay-setting process.

Does the Agglomeration of Producer Services and the Market Entry of Enterprises Promote Carbon Reduction? An Empirical Analysis of the Yangtze River Economic Belt

As the world’s largest carbon emitter, China has been committed to carbon emission reduction and green development. Under the goal of “double carbon”, adjusting the industrial structure and promoting the development of producer services are regarded as effective emission reduction paths. In this paper, from the perspective of market entry of enterprises, we firstly investigate the transmission mechanism between market entry of enterprises and industrial agglomeration and summarize the carbon emission reduction mechanism of producer services. Based on the panel data of 110 prefecture-level cities in China’s Yangtze River Economic Belt (YREB) from 2003 to 2017, we analyze the impact of producer services on carbon emission reduction by using the dynamic spatial panel model. The empirical results show that China’s urban carbon dioxide emissions have noticeable spatial spillover effects and high emission club clustering characteristics and exhibit a noticeable snowball effect and leakage effect in time and space dimensions. The development of the producer services can effectively reduce carbon emission levels, effectively solving the dilemma of “stabilizing growth and promoting emission reduction”. Furthermore, there is an apparent synergistic effect between enterprises’ market entry and industrial agglomeration. The agglomeration of producer services can effectively promote the entry of innovative new enterprises, thus increasing the carbon emission reduction effect. However, due to resource mismatch and isomorphic development, this carbon emission reduction effect has apparent industrial heterogeneity and regional heterogeneity. Finally, this paper makes suggestions for optimizing regional industrial structure, strengthening inter-regional linkage cooperation, and promoting the advanced development of the producer services.