Convergence In GDP Research Articles

Policy lessons from green gdp convergence over five decades: Enhancing sustainability and economic outcomes

This study analyzes the convergence of Green GDP among 160 countries from 1970 to 2019, emphasizing the pivotal role of environmental policies in shaping sustainable economic outcomes. By comparing traditional and Green GDP (includes environmental degradation), this paper identifies distinct economic clusters or “convergence clubs” and reveals how policy-driven changes influence these classifications. The findings highlight the significant impact of environmental policies on economic convergence and propose applicative policy recommendations to foster sustainable growth, making this study essential for policymakers engaged in economic and environmental planning. This study demonstrates the long-term convergence of the selected countries' economic growth, influenced by their disparate commitments to sustainable practices and regulatory frameworks that govern environmental protection. Thus, regardless of the variations across countries and their environmental policies, diverse economic strategies tend to produce similar outcomes in the long term.

COMPARATIVE ANALYSIS OF ECONOMIC DEVELOPMENT RUSSIA IN THE LONG TERM

The objective of this study is to analyze the relationship between the economic weight of Russia and its large neighboring countries (Japan, Germany, Turkey, and Poland) until the end of the 21st century. The primary research method is a systematic comparative analysis of key aspects influencing economic development. The analytical model is based on the dominant influence of human capital on economic dynamics. Among Russia's large neighboring countries, during the period from 2005 to 2023, Japan exhibited the slowest GDP growth by PPP with an exponential trend (3.0 times slower), followed by Poland (1.64 times slower) and Germany (1.4 times slower). Turkey's GDP growth by PPP was 27% higher than that of Russia, which outpaced the global average growth rate by approximately 16%. Russia's unexpected move from 6th to 4th place in the world by GDP in PPP terms is a result of the economy's heavy dependence on oil prices and a series of oil price crises in 2008, 2014, and 2020, which obscured the real growth of the Russian economy. It has been shown that periods of convergence in GDP by PPP between Russia and large neighboring countries (mainly Germany) have repeatedly coincided with military conflicts. These include the War of 1812, World Wars I and II, the Russia-Georgia conflict (2008), and others. In terms of population size, which is the most important factor in GDP growth, Russia has slightly outpaced Japan over the last 35 years (by 16.5% in 2023). Going forward, Japan's population will decline rapidly compared to Russia. The fastest-growing neighboring country, Turkey, will reach the closest point of convergence with Russia in population size by 2060, after which the gap will begin to widen. In terms of the proportion of the population with tertiary education (DT), Russia (57%) is ahead of the neighboring countries under consideration, but Russia's DT growth over the last 20 years has been only 3%, which is a significant problem.

Convergence in Financial Development and Growth

We evaluate the cross-country convergence of financial development and its relationship with GDP growth. Financial inclusion variables have been widely converged across countries, and the catch-up effect of countries with poor financial coverage mainly drives the convergence. In contrast, financial development measures — including domestic credit, liability, mutual fund size, and stock market capitalization — have diverged since 1985 despite the absolute convergence in GDP and financial inclusion. The GDP growth rates strongly correlate with the change in financial development but not the improvement in financial inclusion.

Regional Income, Household Expenditure, Poverty, and Education Convergence Clubs at the District Level in Indonesia

This article reinvestigates the regional convergence in GDP per capita, household expenditure per capita, poverty rate, and average years of schooling in Indonesia at the district level during 2000–2017 using the convergence club method. This article finds that regional inequality in Indonesia at the district level is characterized by two convergence clubs in GDP per capita, five convergence clubs in household expenditure per capita, six convergence clubs in poverty, and five convergence clubs in average years of schooling. This article also confirms the existence of spatial concentration among regions and a development gap between the west and east sides of Indonesia.

Why Cross-Country Convergence of Income is Unsustainable: Evidence from Inclusive Wealth in 140 Countries

Recent economic convergence studies show that cross-country income inequalities have declined since the 1990s. However, this study finds that this episode of income convergence is unsustainable in the long run because countries' capacity to earn income diverges. Specifically, the paper analyses the convergence of per-capita Inclusive Wealth, which comprises all capital assets that contribute to the production of goods and services and the well-being of its society. Utilizing a diverse array of techniques to estimate convergence in a sample of 140 countries between 1990 and 2010, the paper demonstrates the simultaneity of unconditional convergence of GDP and unconditional divergence of Inclusive Wealth. Natural-resource-rich countries that lack human capital, in particular, appear unable to match the global per capita Inclusive Wealth growth rate. A trend emerges towards a bimodal Inclusive Wealth distribution with a substantial low-wealth peak. Thus, although swift income convergence appears promising for developing nations, I caution against optimism. When considering a more appropriate measure of future well-being, such as Inclusive Wealth, the economic outlook for many countries is bleaker than recent studies suggest.

Convergence in GDP per Capita in the Euro Area and the EU at the Time of COVID-19

Abstract This paper investigates determinants of convergence in GDP per capita in the euro area and the EU between 1995 and 2021. It finds that the COVID-19 crisis temporarily slowed convergence but the estimated negative impact is significantly smaller than during the global financial crisis. Diverging effects emerged linked to the timing of the pandemic, the tightness of lockdown measures and the importance of contact-intensive sectors in the economy, like tourism. However, the easing of lockdown measures coupled with policy support (including the successful vaccination strategy) mitigated the risks of a pandemic-driven persistent divergence in growth. Regression results provide further evidence of convergence in the euro area and the EU over the period 1995-2021 and highlight the slowdown in convergence since the global financial crisis, which can be mostly attributed both to a contraction in investment rates in converging countries and to the limited catch-up in total factor productivity growth, especially in euro area countries.

The End of Slovakia’s Convergence in GDP per Capita at PPP: Role of Shortcomings in Input Data Submitted to Eurostat

The End of Slovakia’s Convergence in GDP per Capita at PPP: Role of Shortcomings in Input Data Submitted to Eurostat

Trade, GDP value adding activities and income inequality in the East African community

This paper investigates the extent to which the East African Community (EAC) countries have developed economically over time and whether income inequality decreases with economic growth. The relationship between trade and GDP per capita amongst EAC member countries is evaluated using the World Bank’s meta-data of development indicators and the EAC Secretariat’s data spanning from 2000–2019. Convergence in GDP per capita and inequality are tested using Coefficient of variation (CV) and weightedbeta. The results show that agriculture, manufacturing, trade and repair, construction, and transport and storage constituted the top five GDP value adding activities, contributing about 38 percent to total annual GDP. The EAC GDP per capita were diverging in the long run but converging in short to medium terms, implying increase and decrease in the regional income inequality respectively. Agriculture, electricity and gas, transport and storage, real estate activities, public administration, and education were income inequality-increasing sectors. Together with finance and insurance, these sectors were also positively associated with GDP per capita. The exports of EAC member countries were found to be highly concentrated in few sectors and destination markets, implying limited diversification of products and markets. In their quest to diversify, these countries should choose the right mixes of export goods and services keeping in view of the prevailing market factors in importing countries, such as, changing taste and demands.

Urban–rural population changes and spatial inequalities in Sweden

AbstractThis paper documents regional population changes in Sweden since 1860 and investigates how these changes link to regional economic development (regional GDP). We combine long‐term decade population data for the historical counties (1860–2020) with detailed annual population observations for municipalities (1968–2021). As industrialization picked up speed, this benefited regions all around the country in terms of production, at the same time as regional population patterns started to diverge. After a slowdown in the regional GDP convergence processes during the low‐growth period of the 1980s, ‘double divergence,’ in both population and regional GDP per capita, has characterized Swedish growth patterns since the 1990s.

Are Energy Endowed Countries Responsible for Conditional Convergence?

We test for economic convergence in GDP per capita and consumption per capita within two distinct sets of countries: those with significant (and plausibly exogenous) fossil fuel (FF) endowments and those without such endowments. Among countries with FF endowments, we find evidence of both absolute and conditional convergence across both macroeconomic dimensions, as indicated by standard P- and o-convergence tests. By contrast, we do not find robust evidence of convergence among countries without FF endowments. This pattern—convergence among FF-endowed and non-convergence among non-endowed countries—is robust to changes in the sample period, controlling for potential resource curse effects, and is largely consistent across growth components. We discuss the implications for economic development and comment on its implications for global decarbonization policies.

REGIONAL CONVERGENCE IN NORTH AFRICA REGIONS : PARAMETRIC AND NON PARAMETRIC APPROACHES

Attention to issues of inequality and convergence has become a topic of considerable interest in both developing and developed economies. The purpose of this paper is to study empirically the evolution of the disparities between more than 360 Maghreb regions considering spatial dependence and to explore a non-parametric approach for characterizing convergence of GDP per capita. This study utilizes growth theory as the theoretical foundation to explore the convergence hypothesis. The methodology consists of identifying the shape of the long-run spatial associations through the use of Markov chains which make it possible to derive a unique stationary distribution related to the transition matrix. The results of the analysis indicate the persistence of regional disparities and the importance of geography to explain the global convergence process with positive spatial spillover effects. The proportion of high-income regions surrounded by similar regions has significantly increased detrimentally to the other spatial associations. This non-parametric approach complements the standard parametric method (absolute and conditional beta-convergence) which shows that the slow convergence process can be accelerated by beneficial spatial interaction effects. These results have strong policy implications with regard to national and territorial policies in these countries.

BULGARIA'S REAL CONVERGENCE IN THE CONTEXT OF POTENTIAL EMU MEMBERSHIP

Since the entry of Bulgaria into the European Union, the country's full membership in the Economic and Monetary Union has become one of the national economic policy goals. In the recent period Bulgaria fulfils all the nominal convergence criteria, except for the criterion on exchange rate stability as long as the country does not participate in the ERM II mechanism (although Bulgaria has a currency board arrangement in place since 1997 and the Bulgarian currency is pegged to the euro). Despite that, Bulgaria remains the EU member with the lowest level of GDP per capita and lowest productivity and income levels. In June 2018 the Bulgarian authorities submitted a letter of intent to the EU policy makers to join the ERM II mechanism and the banking union. In July 2020 the mutual agreement to include the Bulgarian lev in the ERM II mechanism and Bulgaria to join the banking union was achieved. In the context of the future full EMU membership it is important to assess the evolution and the state of Bulgaria's real convergence. This paper looks at the Bulgaria's real convergence, understood as the convergence of GDP per capita, labour productivity and convergence of price levels. We use the Beta and Sigma convergence methods and explore the convergence in the 1999-2018 period. We also compare Bulgaria's real convergence to the real convergence of other CEE countries that are EU members (Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia), part of which have already accepted the euro and the other part are still outside of the euroarea. We also try to explain the economic reasoning behind the EMU accession path of Bulgaria. The results of the survey show that Bulgaria lags behind in its convergence process from other CEE countries, but at the same time we believe that the benefits of the euroarea membership outweigh the possible negative consequences.

Great Recession and club convergence in Europe: A cross‐country, cross‐region panel analysis (2000–2015)

AbstractThe paper aims at investigating the impact of the Great Recession on per capita GDP convergence process across European regions and countries. Using the time‐varying factor model developed by Phillips and Sul for the period 2000–2015 and two different merging procedures to identify clubs, we provide evidence of the diverging impact of the Great Recession “between” the higher and the lower convergence clubs at both regional and country levels as well as of the strengthening of the convergence process “within” most clubs. In addition, we add further evidence to the common belief of a “multi‐speed” Europe by contrasting Eastern European countries' and regions' behavior vis‐à‐vis original European members' one, and by identifying the factors that affect club membership and resilience to the recent economic downturn. We find that the membership in the higher clubs and resilience to the Great Recession are positively affected by the presence of several local‐specific factors and macroeconomic characteristics.

Convergence of GDP per capita in advanced countries over the twentieth century

This study compares GDP per capita levels and growth rates across 17 advanced economies over the period 1890–2013 using an accounting breakdown and runs Phillips and Sul (Econometrica 75(6):1771–1855, 2007) convergence tests. An overall convergence process has been at work among advanced economies, mainly after WWII, driven mostly by capital intensity and then TFP, while trends in hours worked and employment rates are disparate. However, this convergence process came to a halt during technology shocks, during the two world wars and since the 1990s, with the convergence of advanced economies stopping far from the level of US GDP per capita.

The Trend of the Inclusive Development Index Across Federal States of Mexico Between 2000–2016: A Convergence Analysis

From 2000 onwards, various studies (Esquivel 1999; Villalta 2003; Aguayo 2004; Gomez & Ventosa 2012; Ocegueda, 2015) have tested whether economic convergence - GDP convergence - took place in Mexico or not as a way to study regional disparities in development across the country. This paper proposes a wider approach, studying said disparities in a multidimensional way that gives importance to other development measures besides GDP (as previously done by Molina & Purser, 2010; Konya & Guisan, 2008; Capello et al., 2011). The convergence (β and σ-convergence) of the Inclusive Development Index (IDI), an indicator that incorporates various dimensions of development besides GDP per capita, is evaluated. This analysis is based on a biannual panel data model with information for the Mexican states and Mexico City for the 2000-2016 period. The main objective is to determine whether development disparities among the Mexican states increased or reduced during the 2000-2016 period through the analysis of the trend of the IDI and its components. Results show that regional convergence of the IDI took place among Mexican states. Said convergence was mainly influenced by the variables of the inclusion component of the index, whilst variables from the growth and development and sustainability components, although present β- convergence, do not show σ-convergence.

Convergence in GDP per Capita across the EU Regions - Spatial Effects

The aim of this paper is to offer an empirical insight into the spatial effects of growth of regional income and disparities across EU regions (NUTS 2). Since regions are spatial units and there are interrelated standard linear regression is not sufficient to evidence the convergence process. Two models (Spatial Lag Model – SLM and Spatial Error model – SEM), derived from spatial econometrics, have been used to identify and explain spatial effects in convergence clubs—all EU countries (EU-28), countries that entered the EU in 2004 (EU-13) and countries that were in EU prior to 2004 (EU-15). Unconditional and conditional β-convergence has been examined in the period 2000-2015 thus covering two financial perspectives (including n + 2 rule3). Dummy variables have been also applied to catch the country-specific effects, such as national policies, legislation, technology progress, etc.

The role of foreign direct investment and labor productivity in explaining croatian regional export dynamics

The potential benefits of trade openness and export led growth strategy are well documented in the empirical literature. As previous researches found evidence that international trade does not support convergence in GDP per capita of Croatian regions towards average EU GDP per capita, this paper investigates the role of foreign direct investments (FDI) and labour productivity in describing Croatian regional export dynamics for the period from 2004 to 2015. The results of the estimated panel models confirm the importance of strengthening manufacturing as well as strong comovements of exports and imports as a consequence of the internalization of product chains. Furthermore, the obtained results indicate that the main obstacles towards strengthening of the Croatian regional exports are the lack of domestic demand effect and decreasing labour productivity. Moreover, as FDI inflows are mostly directed towards service sector it is not surprising that the overall impact of FDI inflows on exports is negative. Although one of the declared goals of Croatian policy makers is attracting FDI into export industries, the effects and, first of all, proper policy measures are yet to be seen.

Competitiveness as the Ability to Adjust: the EU–10 Exports Structure and Its Convergence to the German Pattern

Competitiveness of a nation is associated with a set of characteristics that enable structural adjustment to global technological trends, and as a consequence, a rise in the living standard of its citizens. For catching-up economies, GDP convergence towards the most developed economies, constituting their developmental goal, relies upon its ability to shift production and exports structure towards specialization based on knowledge and innovation. Thus, in this paper, competitiveness is evaluated through structural adjustments of exports, and for catching-up economies (the EU–10 states) it may be understood as the ability to close the structural gap to the most developed countries (here: the strongest EU member economy: Germany). We analyse the evolution of the EU–10 nations’ exports specialization in the years 2000 and 2014, checking whether the convergence towards the German exports pattern can be observed, and which of the analysed economies shows the best ability to shift its exports structure towards high-tech specialization. We look additionally at exports structures in 2004 (the year of EU-accession of eight out of 10 countries in the sample) and in 2009 (world trade collapse during the economic crisis). The analysis is based on the Revealed Comparative Advantage (RCA) concept by Balassa (1965). We use the UN Trade Statistics data in the Standard International Trade Classification (SITC), Rev. 4. Commodity groups are classified following the methodology developed by Wysokińska (1997, p. 18).

Inference in Additively Separable Models with a High-Dimensional Set of Conditioning Variables

This paper studies nonparametric series estimation and inference for the effect of a single variable of interest x on an outcome y in the presence of potentially high-dimensional conditioning variables z. The context is an additively separable model E[y|x, z] = g0 (x) h0 (z). The model is high-dimensional in the sense that the series of approximating functions for h0(z) can have more terms than the sample size, thereby allowing z to have potentially very many measured characteristics. The model is required to be approximately sparse: h0(z) can be approximated using only a small subset of series terms whose identities are unknown. This paper proposes an estimation and inference method for g0(x) called Post-Nonparametric Double Selection which is a generalization of Post-Double Selection. Standard rates of convergence and asymptotic normality for the estimator are shown to hold uniformly over a large class of sparse data generating processes. A simulation study illustrates finite sample estimation properties of the proposed estimator and coverage properties of the corresponding confidence intervals. Finally, an empirical application estimating convergence in GDP in a country-level crosssection demonstrates the practical implementation of the proposed method.

Assessing Ict Role to Economic Convergence of Albania and Western Balkans to European Union

The Western Balkans countries are still considered economies in transition. Coming from centralized systems with low level of GDP per capita the region can accelerate substantially the growth pace as lectured in neoclassical growth theory. The region is considered attractive for foreign investments due to a series of advantages such as the political EU agenda and vicinity to EU markets, low labour costs combined with relatively well educated people. The growth models recognize the importance of technology factor to sustain the productivity, competitiveness and economic growth. Promoting innovative businesses and introducing information and communication technologies (ICTs) will enhance the potentials for economic convergence towards developed economies such as EU. The aim of this paper is to bring in focus the impact of ICT on productivity in the Western Balkans (WB) as well as to the structural convergence within the region. One of the contributors for introduction of new technologies and use of ICT remains the foreign direct investments. The paper will assess the role of FDIs in modelling aggregate production reflected through the exports variety and in particular ICT and high technology goods exports. The methodology of the paper makes use of time series data for a set of indicators for each of the Western Balkans countries: Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro and Serbia. The main conclusion is that the Western Balkans and Albania have shown a slight trend of convergence of productivity among them and to EU by still is not following the same pace as the convergence of GDP per capita. The impact of ICT development in Albania at firm level but also at economic growth is lower than in other Western Balkans countries. The penetration of FDIs in Albania has generated limited contribution to the introduction of new technologies and sophistication of business models. Additionally, it is necessary to address some incentives to promote ICT businesses and professional skills in order to enable the innovation and competitiveness of Albanian economy. JEL classification: F15, F43, O16, O47.