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Income Convergence Hypothesis: A Regional Comparison of selected East and South Asian Economies

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  • Haider, Adnan
  • Hameed, Shahzad
  • Wajid, Abdul

Abstract

The empirical literature on income convergence hypothesis is available for almost all developed or industrialized countries. However, regarding developing economies especially, South Asian region few studies attempted it in their convergence related empirical analysis. Therefore, the central objective of this paper is to empirically examine whether or not income convergence is occurring over time in South Asian economies. Furthermore, within Asian block, the study also compares the convergence results of South Asian economies with its parallel East Asian region. The empirical analysis test both absolute convergence hypothesis (using beta and sigma convergence methodologies as well as Theil’s inequality based approach) and conditional convergence hypothesis (by taking care of relevant control variables). These convergence tests are based on conventional regression equation approach by taking real GDP per capita with some explanatory control variables. Both steps employ the pooled cross-section, time series data set, which provides new insights in the convergence tests for real GDP per capita. Although, empirical analysis of this paper is unable to finds any evidence to accept the null hypothesis of the presence of absolute income convergence. However, our results show the presence of conditional income convergence for both East and South Asian economies. It indicates that income gap between these two groups of economies has narrow down conditional based on some common characteristics but it still remains quite large.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23739.

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Date of creation: 05 Jun 2010
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Handle: RePEc:pra:mprapa:23739

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Keywords: absolute convergence; conditional convergence; Asian economies; growth theory;

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  1. Eatzaz Ahmad & Amber Naz, 2000. "An Empirical Analysis of Convergence Hypothesis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 39(4), pages 729-740.
  2. Evans, George W. & Honkapohja, Seppo, 1999. "Learning dynamics," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 7, pages 449-542 Elsevier.
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Cited by:
  1. Krasnopjorovs, Olegs, 2013. "Latvijas ekonomikas izaugsmi noteicošie faktori
    [Factors of Economic Growth in Latvia]
    ," MPRA Paper 47550, University Library of Munich, Germany.
  2. Zaenal Mutaqin & Masaru Ichihashi, 2012. "The Role of Maastricht Criteria and Membership in Determining Convergence in the Eurozone and ASEAN: A Panel Data Analysis," IDEC DP2 Series 2-7, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).

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