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Trade and convergence of per capita income in the Indian Ocean Zone, 1950–2008

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  • Olivier Peron

    ()

  • Serge Rey

    ()

Abstract

This empirical study of per capita income convergence across the countries of the Indian Ocean Zone (IOZ) during 1950–2008 relies on a distribution dynamics approach that employs both stochastic kernels (stacked and high-density region plots) and a nonparametric estimator. During this period, no absolute convergence process of incomes occurs in the IOZ. Nevertheless, a bipolar situation emerges, such that countries with the weakest relative incomes in relation to the IOZ average remain in the same relative position—that is, the poorest countries remain poor. The relatively richest countries (i.e., Australia, Malaysia, Mauritius, Singapore, and Thailand) constitute a convergence club. Use of conditioned distributions shows that the dynamics of per capita gross domestic product (GDP) distributions can be explained both by the openness rate measured as trade/GDP ratio, or a proxy for trade policy, and by manufactured goods exports. However, this result likely confirms that the openness was accompanied by an increase in manufactured goods trade for many of these countries. In addition, openness defined following Sachs and Warner has a less explanatory power than traditional measure. Finally, bilateral trade and trade agreements have limited effects. Copyright Springer-Verlag 2012

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Bibliographic Info

Article provided by Springer in its journal The Annals of Regional Science.

Volume (Year): 49 (2012)
Issue (Month): 3 (December)
Pages: 657-683

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Handle: RePEc:spr:anresc:v:49:y:2012:i:3:p:657-683

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Keywords: C13; C16; F43; O47;

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Cited by:
  1. Angelos Liontakis & Dimitris Kremmydas, 2013. "Food Inflation in EU: Distribution Analysis and Spatial Effects," Working Papers 2013-3, Agricultural University of Athens, Department Of Agricultural Economics.
  2. Serge Rey & Florent Deisting, 2012. "GDP per Capita among African Countries over the Period 1950–2008: Highlights of Convergence Clubs," Economics Bulletin, AccessEcon, vol. 32(4), pages 2779-2800.

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