Conditional Beta Convergence Research Articles

On the Water-Energy-Food Nexus: Is there Multivariate Convergence?

This paper provides new evidence on the convergence process of energy, water and food per capita consumption levels for 108 countries from 1971 to 2018, using a common data set, with VAR and panel data approach. We establish a new notion of multivariate sigma and beta-convergence. The results reveal that there is evidence of sigma- absolute beta- and conditional beta-convergence process for the countries. Moreover, the multivariate approach reveals that there are spillover effects with complex positive impact of each variable on the others in the analyzed countries. The speed of convergence is simulated to assess when the desired levels according to the prescription of the SDG of per water, energy and food capita consumption is reached by each country. Results have important policy implications for interventions on macro variables. Investment has a positive accelerating effect on water convergence. In addition, investment, openness to foreign trade and inflow of foreign direct investment have a positive accelerating effect on food convergence as well as on energy convergence.

Aceh Province Economic Convergence Determination

This study analyzes the occurrence of economic convergence between districts / cities in Aceh Province and looks at the factors that can accelerate the economic convergence. This study uses panel data from 23 districts / cities in Aceh Province for the period 2008-2018. The results found from this study are that there has been economic convergence, both sigma convergence and beta convergence, in Aceh Province. Factors that significantly influence economic convergence in Aceh Province are the average length of schooling, life expectancy, and the special autonomy fund. The time needed to get to half the convergence process is 4.10 years with the resulting conditional beta convergence rate of 16.89%.

Estimating environmental efficiency and convergence: 1980 to 2016

Abstract Environmental performance assessment has been on the forefront of global economic growth discussions for the past decades. The study of efficiency growth and convergence is important to enable countries to evaluate their uses of inputs and embrace technologies to increase productivity. Using the Malmquist-Luenberger productivity index, this paper investigated the environmental performance of a panel of 104 countries over the period 1980 to 2016. Absolute and conditional beta convergence was analyzed and the possibility of clustering based on the club convergence was also analyzed. The findings show that average global environmental efficiency growth over the period is 1.3%. Convergence in environmental growth is conditional on industrial structure, globalization and energy price. The results also indicate the formation of club clusters in a sub sample of every decade but not in the entire period of study. Policy implications are also suggested.

Mediating Effects of Cohesion Policy and Institutional Quality on Convergence between EU Regions: An Examination Based on a Conditional Beta-Convergence Model with a 3-Way Multiplicative Term

The paper contributes to the existing literature on the EU’s Cohesion Policy outcomes by extending the conditional beta-convergence model with a 3-way multiplicative term to examine the mediating effects of the Cohesion Policy, institutional quality, and their interaction on regional convergence. The empirical analysis based on conditional slope coefficients and conditional standard errors provides evidence that both the mediating factors under consideration contribute positively to boosting regional convergence in the EU at the NUTS 2 and 3 disaggregation level, but with much bigger success over the 2007–2013 programming period compared to the previous one. Moreover, Cohesion Policy and institutional quality act as substituting rather than complementary mediating factors.

Analysis of economic convergence of Islamic justice in selected Islamic countries

Justice is the most important principle in Islam and measures the extent to which decisions in Islamic countries comply with Islamic doctrine. Economic justice is a sub-domain of justice and is further subdivided to distributive justice. Distributive justice implies that improvement in economic well-being of an individual occurs to the detriment of another’s. The present study investigates economic convergence of Islamic justice in selected Islamic countries (Albania, Bangladesh, Azerbaijan, Egypt, Guinea, Iran, Iraq, Jordan, Kazakhstan, Kosovo, Kyrgyzstan, Malaysia, Maldives, Niger, Pakistan, Senegal, Tajikistan, Turkey, Yemen And Tunisia) during 1995–2015 using beta-type convergence and generalized method of moment. It is argued that growth rate of income distribution in communities that suffer from bad income distribution system will move in the long run towards fair distribution. Results of absolute beta convergence indicate convergence of Gini coefficient at rate of 0.31. The Gini coefficient is significant at 1%. Moreover, results of conditional beta convergence reveal convergence of Gini coefficient. Inflation rate and GDP positively affect this convergence.

REGIONAL INCOME AND ITS CONVERGENCE IN INDONESIA

This study aims to calculate and analyze whether or not a decline occurs in regional income inequality (sigma convergence). Additionally, it attempts to examine the ability of low-income provinces to catch up the provinces with a high regional income, neither controlled nor (absolute convergence and conditional convergence). Finally, the study calculates the speed and time needed to catch up to half of the lags. The first objective of thestudy was answered by using the coefficient of variation. The second objective was answered by the First Difference GMM (FD GMM) method, and the third objective was answered by using a formula for calculating the convergence speed expressed by Feldkircher (2006), and the half convergence formula from Barro & Sala-i-Martin (1995). This research figured out that sigma convergence occurreds after divergence. The research also reported no convergence of regional income beta, in both absolute and conditional convergences. Finally, the time needed to catch up the half of the lags in non-conditional beta convergence was shorter than conditional beta convergence.

Nonlinear globalization threshold effect of energy intensity convergence in Belt and Road countries

This paper investigates the role of globalization, especially so-called threshold effect, in convergence of energy intensity along the Belt and Road countries during the period 1992–2016. Different from the previous studies, which primarily consider the linear effect and neglect the cross-sectional dependence of convergences, we construct a panel smooth transition regression model in this work, simultaneously taking dynamics, heterogeneity, non-linear and cross-sectional dependence characteristics into account. The results show that there exists a non-linear globalization threshold effect on the unconditional beta convergence, conditional beta convergence and club convergence of energy intensity, and the convergence becomes faster when the globalization level is above the threshold. These findings imply that a rise in the level of globalization contributes to the convergence of energy intensity in the Belt and Road countries; thus, governments in such countries could reduce energy intensity through increasing the level of globalization, which may in turn be achieved by deep cross-national cooperation in economic, social and political areas.

EFFICIENCY AND INCREASING PRODUCTIVITY OF THE MANUFACTURING INDUSTRY OF EAST JAVA PROVINCE

This study aims to analyze technical efficiency and to find out the main contributors to the productivity of the manufacturing industry in East Java, which increased in 2007-2015. On the other hand, this research also aims to determine the direction of the efficiency of the manufacturing industry sub-sector and the factors that influence the level of efficiency of the manufacturing industry. The level of efficiency that approaches the frontier signifies convergence, while divergence indicates that the level of efficiency that has not approached the frontier. There are 24 manufacturing industry sectors that were observed in this study. To calculate the value of technical efficiency, this study uses Data Envelopment Analysis (DEA) with a bootstrapping approach with 2000 times the number of iterations. While the calculation of productivity changes in this study uses the Malmquist Index. Conditional beta convergence analysis (β), sigma convergence (σ), gamma convergence (γ), and stochastic convergence is used to analyze efficiency convergence. The results of the score of technical efficiency analysis show that the manufacturing industry in East Java is still in an inefficient condition with the electrical equipment industry being the highest efficiency score sector, while the furniture industry is the most inefficient sector. Technological progress at 54 percent each year is a major contributor to the increase in manufacturing industry productivity by 55 percent during 2007-2015. On the other hand, the results of testing four convergence models show different results, sigma, gamma, and stochastic convergence indicating the convergence of manufacturing industry efficiency, while conditional beta convergence testing shows an indication of the divergence in manufacturing industry efficiency. The GMM estimation results show that factors that significantly affect the efficiency of manufacturing industries are energy intensity, capital-labor ratio, capital intensity, and industrial share.
 JEL: D24, L60

Convergence Anatomization of Aquaculture Production in Leading Fish-Producing Countries During the Period of 1997-2013

Growth and national importance of aquaculture production is empirically assessed as an important indicator of development. The present article aims to test whether the major aquaculture producing countries of the world are converging over time. The authors have applied the absolute and conditional beta convergence and sigma convergence approaches on the data of FAO for the period 1997-2013. The results show that there is an absolute beta convergence and sigma convergence among 25 major aquaculture producing countries; negative sign of coefficient of conditional beta convergence with per capita income is also noticed. It implies, the growth rates of aquaculture for developed nations are declining with rise in per capita income and backward fish-intensive countries are catching up with the giant producers like China and India. The cross-country variations are also going down which means that the countries' development gaps are getting narrowed by means of growth of aquaculture resources.

The Underlying Factors of Regional Income Disparities in Indonesia

An increasing of regional data availability has revived of scholars’ interest in regional economic growth and disparities. The main reason for this revival came from attempts to improve the predictive ability of neoclassical model of growth. The objectives of this paper are to examine per capita gross regional product growth disparities, to check the existence of sigma and beta convergence across Indonesian provinces and to identify the underlying factors that affect per capita gross regional product growth. This is a quantitative study, and by making use of Coefficient of Variation and the Neoclassical Growth Model we found that The per capita gross regional product growth disparities tend to increase in the period of study, however, the existence of conditional beta convergence also implies. The underlying factors that are identified affect real per capita GRP growth are export, Foreign Direct Investment, Inflation and government expenditure.

Revisiting cross-province energy intensity convergence in China: A spatial panel analysis

Understanding the convergence of energy intensity helps in assessing whether policies targeted at reducing energy intensity are effective and should thus be continued or reinforced. This paper analyzes the convergence of cross-province energy intensity in China based on panel data of 29 provinces for the period 2003–2015 by means of sigma convergence, kernel density analysis, and unconditional and conditional beta convergence. The empirical results show that the omission of spatial spillovers underestimates conditional beta convergence. We thus argue that the implementation of effective policy for reducing energy intensity depends not only on the driving forces in the own province but also on the spatial spillover effects in neighboring provinces, particularly technology transfer, knowledge spillovers, and the input-output relationship. From the analysis, it follows that adopting low-energy capital, attracting more FDI inflows and developing indigenous innovation capabilities are major policy handles.

The Convergence of Beta Credit for Micro, Small and Medium Enterprises (MSMEs) in Indonesia’s Provinces

<p><em>The success of SMEs is determined by the business capital and able to give value added to the business more productively. Various financing pattern schemes for SMEs have been provided in various regions and all economic sectors. However, the development of SMEs credit is still concentrated in several regions in Indonesia</em><em> t</em><em>his can lead to inequality in the growth of SMEs</em><em>. </em><em>This study aims to analyze the convergence of absolute beta and conditional beta in the Provinces in Indonesia and calculate the half-time or time required to achieve steady-state conditions of the SME credit convergence process. Convergence test used is beta conditional convergence and absolute convergence with the monthly time period during 2017.1 until 2017.7. The determinant of SMEs convergence of credit in Indonesia is a number of third-party funds. The model used is dynamic panel data regression and the estimation method used is Arellano-Bond Generalized Method of Moment (AB-GMM).</em></p><p><em>The results of the study show that during the study period, there has been a convergence credit process in Indonesia for both absolute and conditional convergence models. The conditional beta-convergence model provides a smaller beta value than the absolute model. The speed of credit growth convergence between provinces in Indonesia with half-time of 6,94 months for the absolute model and the half-time of 6,96 months for the conditional model. </em><em></em></p>

The Convergence of Beta Credit for Micro, Small and Medium Enterprises (MSMEs) in Indonesia’s Provinces

The success of SMEs is determined by the business capital and able to give value added to the business more productively. Various financing pattern schemes for SMEs have been provided in various regions and all economic sectors. However, the development of SMEs credit is still concentrated in several regions in Indonesia this can lead to inequality in the growth of SMEs. This study aims to analyze the convergence of absolute beta and conditional beta in the Provinces in Indonesia and calculate the half-time or time required to achieve steady-state conditions of the SME credit convergence process. Convergence test used is beta conditional convergence and absolute convergence with the monthly time period during 2017.1 until 2017.7. The determinant of SMEs convergence of credit in Indonesia is a number of third-party funds. The model used is dynamic panel data regression and the estimation method used is Arellano-Bond Generalized Method of Moment (AB-GMM). The results of the study show that during the study period, there has been a convergence credit process in Indonesia for both absolute and conditional convergence models. The conditional beta-convergence model provides a smaller beta value than the absolute model. The speed of credit growth convergence between provinces in Indonesia with half-time of 6.94 months for the absolute model and the half-time of 6.96 months for the conditional model

Effects of Credit Market Freedom on the Convergence of Chinese Banks’ Profits

Using an unbalanced panel of 96 banks that operate in the Chinese banking sector from 2007 to 2014, we first seek to uncover the relation between credit market freedom and bank profit. Thereafter, we further analyse the freedom effects on the convergence of bank profit so as to explain the prevailing persistent fall in the profit growth of Chinese banks. Two types of convergence are considered in this study: beta-convergence and sigma-convergence, which are estimated by using dynamic panel data estimator. Our results suggest that beta-convergence does not take place for all ownership structures until discrepancies on their traits and structural parameters are conditioned out, suggesting that it is the conditional beta-convergence rather than the absolute beta-convergence that transpires in China’s banking sector. While freedom is found to reduce profit growth significantly, its negative impact on the speed of beta-convergence is arguably negligible. This alludes that China has done reasonably well in balancing its liberalization initiatives with stabilization measures so that the fall in profits instigated by freedom does not significantly overshoot its long-run equilibrium path. Credit market freedom is also found to be a significant catalyst for sigma-convergence for all ownership structures but state-owned commercial banks and foreign banks.

Determinants of social spending in Latin America during and after the Washington consensus: a dynamic panel error-correction model analysis

This paper examines the determinants of social spending in Latin America during the period 1990–2012 and how they differed between the years of the Washington Consensus (1990–2000) and the period that followed (2001–2012). Special attention is also paid to the evaluation of convergence towards a common upper-bounded steady state (absolute beta convergence) or to specific steady states conditioned by their country’s specific determinants (conditional beta convergence). We estimate a panel error-correction version of an autoregressive distributed lag model to identify the long-term relationships between social expenditure and its determinants. Generalised methods of moments estimators are used to control the endogeneity of the regressors. Results indicate that Latin American social spending follows a conditional beta convergence process over the Washington consensus period that was mainly driven by structural differences in fiscal burdens and external debt, while during the second period it was explained by conjunctural differences in the fiscal burden, GDP per capita and the growth of trade and capital openness.

Catching-up in waste management. Evidence from the EU

This work tests for the presence of convergence in the main municipal solid waste disposal choices across EU countries over the years 1995–2010. We believe this is a relevant exercise, considering that in the last two decades the waste sector has experienced a profound transformation at the European level. In this context, β and σ tests of convergence can tell us more about the distribution of these different rival choices of waste disposal, by assessing on the one hand the presence of convergence and, on the other hand, the role played by environmental policy and green technological change in driving convergence. Our regression results suggest that conditional beta convergence is substantial for both recycling and incineration. For the case of recycling, this convergence is faster for countries characterised by a technological endowment in recycling technologies and stringent waste policies. Finally, heterogeneity across countries (sigma convergence) appears to decrease over time.

The impact of the Great Recession on TFP convergence among EU countries

ABSTRACTThis article provides evidence on the effect of the Great Recession on productivity convergence among European Union (EU) economies. We use firm data, aggregated at the country-year level, to analyse the evolution of beta-convergence on total factor productivity (TFP) for 2003–2014. We obtain a positive impact of the recession on TFP (unconditional and conditional) beta-convergence across EU economies. These results support the existence of a catching-up process within the EU during the recent financial crisis. Other macroeconomic and institutional characteristics are important in fostering TFP growth, namely R&D intensity and quality of governance.

Spatial Dimensions of Sectoral Labor Productivity Convergence in Turkey: A Spatial Panel Data Approach

AbstractThe purpose of this study is to investigate spatial dimensions of interregional labor productivity convergence in Turkey between 2005 and 2011 period in three sector disaggregation. We employed spatial panel data approach to investigate the absolute and conditional beta convergence. Annual gross value added per worker data has been used as labor productivity proxy for 26 sub-regions. Analysis results show us that absolute and conditional convergence is highly significant for all agriculture, industry and services sector and also in sectors total. We also found that, while industry, services and sectors total show significant spatial dependency, there is no strong evidence of spatial interaction in agriculture sector for Turkey. Structural problems of Turkish agriculture sector are considered to be the main reasons behind this finding.

Convergence of Electricity Consumption in Turkey: Spatial Panel Data Analysis

The issue of convergence has been discussed in many theoretical and empirical studies. Because per capita electricity consumption is considered as an indication of economic growth and development, this study aims to test the presence of “absolute and conditional beta convergence” of per capita electricity consumption among the provinces of Turkey between 1986 and 2013. Using the spatial panel data model, our findings show evidence of absolute beta-convergence of per capita electricity consumption among the provinces of Turkey. We conclude that regional policies are successful in reducing the regional disparities in per capita electricity consumption among the provinces of Turkey.

Regional disparities in per capita income in India: convergence or divergence?

The paper looks at the latest evidence on what has been happening to regional disparities in per capita income (measured as gross state domestic product per capita) in India over the first decade of the twenty-first century (1999/2000 to 2010/2011) by estimating cross-section equations for unconditional and conditional beta (β) convergence and sigma (σ) convergence across thirty-two regions (twenty-eight states and four union territories). There is no evidence of unconditional convergence, but weak evidence of conditional convergence controlling for population growth, credit growth, male literacy, the share of agriculture in state GDP, and state expenditure as a share of state GDP. Sigma divergence has increased continuously, except among the poorest states.