Existence Of Convergence Clubs Research Articles

Closer together or further apart? Club convergence in the Organization of Islamic Cooperation (OIC) countries

PurposeThis paper aims to examine the per capita income convergence of 57 member countries of the Organization of Islamic Cooperation (OIC) over the period 1990–2017 and to investigate the determinants of convergence club formations.Design/methodology/approachThe authors applied the methodology of Phillips and Sul (2007, 2009) to identify the convergence clubs and estimated several-ordered logit models to determine the key drivers.FindingsThe results support existence of two convergence clubs and one diverging unit, indicating that 30 and 26 member countries form two separate groups converging to their own steady-state paths. They also suggest a significant productivity divergence between these clubs. The authors showed that the number of convergence clubs started to decline after the global financial crisis in 2008. Moreover, they found that fixed capital formation, education and political stability are key drivers of convergence club membership.Practical implicationsThere is a strong need for large-scale policy interventions to close the gap between leading and lagging clubs of the OIC. A substantial investment in human and physical capital seems necessary for lower-income OIC countries.Originality/valueThis is the first empirical study on the existence of convergence clubs among member countries of the OIC.

A demanda de automóveis no Brasil: uma análise a partir de efeitos regionais

O presente trabalho investigou a demanda de automóveis por mil habitantes nas microrregiões brasileiras por meio dos processos de convergência absoluta e condicional além de testar a hipótese da existência de clubes de convergência, no período 2004 a 2015. Investigou também, os efeitos regionais da redução do IPI (Impostos sobre Produto Industrializado) com o objetivo de identificar se o consumo de automóveis por mil habitantes a nível de regional sofreu alteração no período de atuação dessa política (2008 a 2014), em relação ao período anterior (2004 a 2007), os resultados foram obtidos por meio do uso de ferramentas de Análise Exploratória de Dados Espaciais (AEDE) e da Econometria Espacial. As estimações indicaram que microrregiões que apresentaram uma menor demanda efetiva por mil habitantes no período inicial (2004-2007) tenderam a ter maiores taxas de crescimento de suas frotas de automóveis no período posterior (2008-2014), evidenciando assim, um processo de homogeneização ao longo do território brasileiro. Ademais, os resultados indicam existência de dois clubes de convergência denominados de norte e sul, os quais apresentaram características distintas. Por fim, as variáveis estruturais mostraram-se satisfatórias tendo seu grau de significância em 1%. Esses resultados corroboram com aqueles encontrados pelos autores Cintra (2014), Haddad (2015), Lucinda (2017), que identificaram externalidades positivas do aumento da frota de automóveis e que têm o potencial de alavancar o dinamismo nas regiões vizinhas.

Globalization, regionalization and convergence in East Asia

ABSTRACTThis research paper reports the result of an investigation into the pattern of income convergence in East Asia since 1970 and the proximate role of increased regionalization and inter-regional globalization in generating regional convergence or divergence. Specifically, we apply sigma and log t convergence tests for income convergence in the East Asian region and an augmented autoregressive distributed lag (ARDL) model to analyze the relationship between regional income dispersion and intra- and extra-regional flows of goods, capital and technology. Regardless of the measure of per capita income, the sigma convergence tests fail to find any evidence of intra-regional convergence. The log t convergence tests do not indicate overall convergence either, but, indicate the existence of convergence clubs within the region. The regression analysis suggests that intra-regional flows of capital and technology and extra- regional FDI flows unambiguously engender convergence while intra-regional trade flows and extra-regional exports have divergence effects.

A convergence assessment of water price rates: evidence from major U.S. cities

In this paper we examine whether there is a convergence among residential water price rates for thirty major U.S. cities over the period 2010–2017. By utilizing the methodological framework by Phillips and Sul (Econometrica 75:1771–1855, 2007, J Appl Econom 32:1039–1042, 2009) we test for the existence of convergence clubs among cities’ water pricing policies. We identify the existence of convergence clubs which are based on different consumption markets. The estimated transition paths reveal a tendency of policy makers to increase water price rates over the examined period, which is more pronounced for lower consumption markets.

DETECTING CONVERGENCE CLUBS

The convergence hypothesis, which is developed in the context of growth economics, asserts that the income differences across countries are transitory, and developing countries will eventually attain the level of income of developed ones. On the other hand, convergence clubs hypothesis claim that the convergence can only be realized across groups of countries that share some common characteristics. In this study, we propose a new method to find convergence clubs that combines a pairwise method of testing convergence with maximum clique and maximal clique algorithms. Unlike many of those already developed in the literature, this new method aims to find convergence clubs endogenously without depending on a-priori classifications. In a Monte Carlo simulation study, the success of the method in finding convergence clubs is compared with a similar algorithm. Simulation results indicated that the proposed method perform better than the compared algorithm in most cases. In addition to the Monte Carlo, a new empirical evidence on the existence of convergence clubs is presented in the context of real data applications.

The Mediterranean Banking Systems: Convergence or Path Dependence?

This paper studies the convergence of banking indicators in the Mediterranean economies, an area including 19 European, Asian and African countries. We compare banking convergence, measured by the ratios of deposits and loans to GDP, with convergence of per capita income, using 20 European Union countries as control sample. We assembled a large dataset starting from the Sixties. The econometric exercises apply the concepts of beta, sigma convergence and stationarity tests. We also tried to detect the existence of convergence clubs, i.e. subsets of countries that are more similar than the Mediterranean nations as whole. We got three main results. First, in the Mediterranean countries some convergence of banking indicators exists, mainly for deposits, but it is weaker than in the EU countries. Second, per capita income convergence did not take place in the Mediterranean area, while there is evidence of it in the EU countries. Third, splitting the Mediterranean area in smaller set of countries, we found real convergence for the clubs of African and Arab countries, while banking convergence was confirmed for European nations.

Evidencing European regional convergence clubs with optimal grouping criteria

Growth literature has considered the existence of groups of economies that have been termed convergence clubs. This paper groups European regions in order to detect whether the existence of convergence clubs can be defended in this context. To this end, we define optimum criteria using an inequality measure. Our classification shows stability for extreme groups based on a stratification index. Results show evidence in favour of the presence of convergence clubs for the backward European regions.