Process Of Income Convergence Research Articles

Sustainability of Income Convergence in the European Union: Two Downturns—Two Different Stories

The aim of this paper is to apply the concept of marginal vertical income convergence to analyze the influence of the two last economic downturns (2007 and 2020) on the sustainability of the equalization of income levels within the European Union. The methodology used enables us to avoid some restrictions of the classical analysis of income convergence. Income convergence models were estimated using data from the period 1993–2022, excluding the impact of outliers. The results confirm that we can observe the progressive process of the absolute income convergence for EU members, but there are significant differences between countries’ contributions to the process. These differences are caused by different paths of economic growth, and different mean resilience to economic crises, as well as different patterns of income inequalities. Their proper recognition allows us to develop efficient policies aimed at social cohesion, reducing income inequalities (the 10th Sustainable Development Goal), and sustainable economic development. Additionally, the estimated models indicated a definite different impact of the last two economic shocks on the European process of income convergence. The first shock significantly slowed down the income convergence process, while the second one was practically neutral in this context.

Enflasyon Büyümenin Tetikleyicisi Mi Yoksa Ekonomik Yavaşlığın Habercisi Mi? Türkiye’nin 26 Alt-Bölgesi Üzerine Dinamik Eşik Modeli Analizi

This study aims to explain the effects of regional inflation thresholds on regional economic growth in 26 sub-regions (NUTS-2 level) in the Turkish economy by using dynamic threshold model analysis for the period 2004-2020. The findings of the analysis show that increases in regional inflation rates affect regional growth positively until reaching the threshold value, but negatively after exceeding the threshold value in 20 of 26 sub-regions. This result is in parallel with the findings frequently questioned in the literature in recent years and points out the phenomenon that is composed of the synthesis of the monetarist and the structural views. Besides, analysis findings showing that steady-state income convergence process is valid in 25 sub-regions reflect that increases in regional population ratios have statistically insignificant effects on regional economic growth. In addition, it has been observed that employment increases accelerate the growth processes of relatively developed regions, while statistically insignificant effects have been detected in underdeveloped regions. A similar result shows itself in terms of foreign trade data, and it is seen that the effect of foreign trade on regional growth is quite limited. When the results are evaluated as a whole, it can be mentioned that the distinction between developed and underdeveloped regions in the Turkish economy is sharp and that macroeconomic indicators affect the economic growth of the regions according to their development level.

Producto regional en Uruguay durante la Primera Globalización (1872-1908): desigualad decreciente y convergencia entre regiones

We present estimates of regional products in Uruguay during the First Globalization (from the 1870s to the years previous to the World War I). Our results show a decreasing and irregular trend in the regional inequality which is consistent with a process of income convergence between provinces. The irregularity of the trajectory would be evidence of the performance of centrifugal and centripetal forces that alternated influences during the period. The forces that trended to decentralize production were the combination of abundant natural resources suitable for livestock production throughout the territory with the reduction of transport costs that made possible to access more easily to Montevideo and, through its port, to the global market. Centripetal forces would have responded to a process characterized by the increasing importance of Montevideo as urban and administrative center, a huge market of goods and services and a dynamic centre of labour market. In addition, Montevideo evidenced the increasing importance of commercial and financial activities (and its potential for making industrial development more flexible), which was only interrupted by the economic and financial crisis of 1890-1891. In facts, the crisis constituted one of the main equalizing forces of the period. The result was to start the twentieth century with levels of regional inequality lower than those recorded in the 1870s-1880s.

TECHNOLOGICAL CAPABILITIES AND PATTERNS OF INCOME CONVERGENCE IN EUROPE: A CLUSTER ANALYSIS

This paper analyses the patterns of convergence across the European Union countries in terms of both economic growth and technological conditions during the period 1995-2013. We apply the methodology of Phillips-Sul (2007) to study convergence in real income per capita and countries’ technological capabilities. We consider separately eight technological indicators as proxies for a country's innovative ability and absorptive capacity. The results support the club convergence hypothesis for income and some technology-related indicators, and offer an approximation to the role that technological capabilities could play in the income convergence process.

Growth and Income Convergence: Do Worldwide Economic Groups Make Any Difference?

The aim of this paper is to study the income convergence process according to economic growth in the world. In addition of the income countries analysis, the paper introduce a deeper analytical framework invol ving groups of countries in the word. The study concerns 135 countries using data covering the period from 1980 to 2013. The methodological framework develop a cross - country analysis in the world, which integrate a decomposition approach for unconditional β - convergence, σ - convergence and conditional β convergence of economic growth and income dynamics. Furthermore, based on the generalized Gini coefficient, the decomposition framework split the change in income inequality into progressivity/pro - poor growth and re - ranking components. The results are consistent with earlier studies that have examined inequality across countries. The main findings underline - even if cross - sectional and longitudinal analysis of the income distribution provide different complementary pictures over time - that except for few countries, all the results show a very weak evidence of β - convergence, σ - convergence and conditional β - convergence in the world, and that there is still a lot of work to do in order to reach some accep ted levels of convergence as far as the income disparities and economic growth are concerned. Furthermore, even in the case of groups of countries with common economic interests, the convergence process is even more complicated and very hard to achieve in the majority of cases if a relative homogeneity could not be ensured about the growth’s key indicators.

Identyfikacja i znaczenie obserwacji nietypowych w modelach konwergencji dochodowej

The research of income convergence found remunerative findings in the existing literature and economic practice. The results obtained, however, show comparatively large differentiation. Many authors underline the strong dependence of the results obtained from the time and spatial character of the sample as well as the type of methods applied. Little attentions is placed on the role of non-typical observations (outliers) which can occur as a result of incorrect measurement, random error, non-standard circumstances or intentional impact. The hypothesis verified was that outliers exert an essential influence on estimation results. The main objective of the analyses provided was to determine if the occurrence of such observations significantly changes the quality of the models built and the speed of the process of income convergence.

Income convergence prospects in Europe: Assessing the role of human capital dynamics

We employ income projection models based on human capital dynamics in order to assess quantitatively the role that educational improvements are expected to play as a driver of future income convergence in Europe. We concentrate on income convergence dynamics between emerging economies in Central and Eastern Europe and Western European countries during the next 50 years. Our results indicate that improvements in human capital contribute significantly to the income convergence potential of European emerging economies. Using realistic scenarios, we quantify the effect that future human capital investment paths are expected to have in terms of speeding up the income convergence process in the region. The income projection exercise shows that the returns to education in terms of income convergence in Europe could be sizeable, although it may take relatively long for the poorer economies of the region to rip the growth benefits.

SPATIAL FILTERING, MODEL UNCERTAINTY AND THE SPEED OF INCOME CONVERGENCE IN EUROPE

SUMMARYIn this paper we put forward a Bayesian model averaging method aimed at performing inference under model uncertainty in the presence of potential spatial autocorrelation. The method uses spatial filtering in order to account for uncertainty in spatial linkages. Our procedure is applied to a dataset of income per capita growth and 50 potential determinants for 255 NUTS‐2 European regions. We show that ignoring uncertainty in the type of spatial weight matrix can have an important effect on the estimates of the parameters attached to the model covariates. After integrating out the uncertainty implied by the choice of regressors and spatial links, human capital investments and transitional dynamics related to income convergence appear as the most robust determinants of growth at the regional level in Europe. Our results imply that a quantitatively important part of the income convergence process in Europe is influenced by spatially correlated growth spillovers. Copyright © 2012 John Wiley & Sons, Ltd.

A panel data approach to the income convergence among Mainland China, Hong Kong and Macao

This paper provides empirical evidence in support of income convergence among Mainland China, Hong Kong and Macao in the postreform era of Mainland China. Adopting the multieconomy income convergence model and employing the panel unit root testing techniques, this paper finds that relative incomes of Mainland China, Hong Kong and Macao have no tendency to deviate from one another in the long run. The occurrence of income convergence among these Chinese economies can be attributed to rapid growth on the Mainland China and Macao sides but relatively sluggish performance of Hong Kong in recent years. Macao can be regarded as playing a catalytic role in this long-run income convergence process. The finding of convergence indicates promising prospects for deepening economic cooperation and integration among the Chinese economies for their long-run sustainable economic growth.

Income and employment disparities across European regions: The role of national and spatial factors

Meliciani V. (2006) Income and employment disparities across European regions: the role of national and spatial factors, Regional Studies 40, 75–91. The paper analyses the impact of trends in employment rates on income convergence across European regions looking at the evolution of entire distributions. Between 1988 and 1996, European regions have been characterized by a very slow process of income convergence across countries and by a lack of income convergence within countries. While trends in labour productivity have contributed to income convergence, trends in employment rates have had a diverging impact. Polarization in employment rates also appears to be the result of national factors and of the negative performance of Objective 1 regions more than the consequence of the emergence of geographical clusters that go beyond national borders. Regional convergence; Unemployment; Spatial correlation; Non-parametric estimation Meliciani V. (2006) Les écarts de revenu et d'emploi à travers les régions d'Europe: l'importance des facteurs nationaux et géographiques, Regional Studies 40, 75–91. Cet article cherche à analyser l'impact des tendances dans le domaine des taux d'emploi sur la convergence des revenus à travers les régions d'Europe, étudiant l'évolution des distributions entières. Il s'avère que, sur la période allant de 1988 à 1996, les régions d'Europe se caractérisent par un processus très lent de convergence des revenus à travers les pays et par un manque de convergence des revenus au sein des pays. Alors que les tendances dans le domaine de la productivité du travail ont contribué à la convergence des revenus, les tendances dans le domaine des taux d'emploi ont incité à la divergence. Il s'avère aussi que des taux d'emploi polarisés résultent des facteurs nationaux et de la performance négative des régions classées sous l'Objectif 1 plutôt que de la naissance des regroupements géographiques qui vont au-delà des frontières nationales. Convergence régionale; Chômage; Corrélation géographique; Estimation non-paramétrique Meliciani V. (2006) Einkommen und Ungleichheiten bei Erwerbstätigkeit in europäischen Regionen. Die Rolle überregionaler und räumlicher Faktoren, Regional Studies 40, 75–91. Dieser Aufsatz analysiert die Auswirkung von Tendenzen bei Erwerbstätigkeitsraten auf Einkommenskonvergenz in allen europäischen Regionen, und untersucht die Entwicklung ganzer Verteilungsmuster. Es zeigt sich, daß europäische Regionen sich im Zeitraum 1988–96 durch ein sehr langsames Fortschreiten der Einkommenskonvergenz der Länder und durch Mangel an Einkommenskonvergenz überhaupt auszeichnen. Zwar haben Tendenzen der Arbeitsleistung zur Einkommenskonvergenz beigetragen, doch Tendenzen der Erwerbstätigkeitsraten haben sich davon abweichend ausgewirkt. Die Autoren stellen auch fest, daß Polarisation in Erwerbstätigkeitsraten anscheinend eher das Ergebnis überregionaler Faktoren sowie der negativen Leistung der Objektive 1 Regionen ist als der Folge des Auftauchens geographischer Cluster, die sich über Landesgrenzen hinweg ausdehnen. Regionale Konvergenz; Erwerbslosigkeit; Räumliche Beziehungen; Nichtparametrische Berechnungen Meliciani V. (2006) Desigualdades de ingresos y trabajo en las diferentes regiones europeas. El papel de los factores nacionales y espaciales, Regional Studies 40, 75–91. En este documento analizamos el impacto de las tendencias en las tasas de paro con respecto a la convergencia de ingresos en las diferentes regiones europeas y estudiamos, además, cómo evolucionan distribuciones enteras. Hemos observado que durante el periodo de 1988 a 1996, las regiones europeas se han caracterizado por un proceso muy lento de convergencia de ingresos entre los diferentes países y por una falta de ésta dentro de los mismos países. Si bien las tendencias en la productividad laboral han contribuido a una convergencia de ingresos, hemos notado que las tasas de paro han tenido el efecto opuesto. Asimismo observamos que la polarización en las tasas de empleo parece obedecer más a factores nacionales y al rendimiento negativo de las regiones de Objetivo 1 que a la emergencia de grupos geográficos que traspasan las fronteras nacionales. Convergencia regional; Desempleo; Correlación espacial; Estimación no paramétrica

The Elusive Gains From International Financial Integration

Standard theoretical arguments tell us that countries with relatively little capital benefit from financial integration as foreign capital flows in and speeds up the process of income convergence. We show in a calibrated neoclassical model that conventionally measured welfare gains from this type of convergence appear relatively limited for developing countries. The welfare gain from switching from financial autarky to perfect capital mobility is roughly equivalent to a 1 percent permanent increase in domestic consumption for the typical non-OECD country. This is negligible relative to the welfare gain from a take-off in domestic productivity of the magnitude observed in some of these countries.

The relative contributions of location and preferential policies in China's regional development: being in the right place and having the right incentives

A large part of the literature on provincial inequality in China has found it necessary to include regional dummies in the provincial growth regressions. A smaller but vocal part of the literature has emphasised the granting of preferential policies to explain the faster growth of the coastal provinces. We replace the regional dummies with a measure of the ability to participate in international trade ( Geography), and a preferential policy index ( Policy). We find that geography and policy had about equal influence on coastal growth (3 percentage points each). Geography affected growth with a much longer lag than policy, however. The policy index was highest for the metropolises (Beijing, Shanghai, and Tianjin) and lowest for the central and northwestern provinces. The preferential policies are to a large extent “deregulation policies” that enabled marketization and internationalization of the coastal economies and allowed them to become more like their East Asian neighbours (and competitors). The weak (statistically insignificant) support for conditional convergence is in line with the existence of institutions that retard the income convergence process generated by the movement of labor and capital and by the Stolper–Samuelson mechanism. The household registration system ties the peasants to the land, the monopoly state bank system favors borrowing by state enterprises, and local protectionism reduces inter-provincial trade. Clearly, these institutions need to be deregulated. An effective strategy to develop the western provinces must therefore encompass physical capital formation, human capital formation, and institutional capital formation.

Convergence Clubs in Minas Gerais State, Brazil

This paper investigates the hypothesis of income convergence clubs among 722 municipal districts in Minas Gerais, evaluating the role of important economic and social variables, such as human capital, distribution of income and poverty, size of the economy, income and regional location in the characterization of those convergence clubs, from 1985 to 1997. Initially, a cluster analysis is used with the objective of forming homogeneous municipal districts groups with respect to those variables. It basically identifies different patterns of economic and social development among the municipal districts of Minas Gerais. The cluster analysis had detected 14 groups of municipal districts. After that, convergence analysis had found 9 convergence clubs (among those 14 groups) using the beta convergence criteria. The income equalization trend was confirmed by the sigma convergence test in most convergence clubs. Among the 14 groups, 5 groups did not participate in the income convergence process. The end of educational, income distribution and poverty discrepancies among municipal districts seems essential for a broader convergence process.