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Income Convergence in Developing Countries


  • Emmanuel Anoruo
  • Ferdinand Nwafor


This paper investigates income convergence in 20 developing countries, including Algeria, Benin, Burkina Faso, Cameroon, Chad, Cote d'Ivoire, Gabon, Gambia, Indonesia, Malaysia, Mali, Morocco, Mozambique, Niger, Nigeria, Pakistan, Senegal, Togo, Turkey, and Uganda. This paper applies a battery of tests including the modified Dickey-Fuller, the Phillips-Perron, and the two-break minimum LM unit root procedures. The results suggest that the per capita income of each of the sample countries is stationary and therefore, mean-reverting. Most importantly, these results provide evidence in support of income convergence among the sample countries. Two important findings emerge from the study. First, contrary to the earlier studies on this issue, the present study finds evidence in support of income convergence among the sample developing countries. Second, the inability of most of the previous studies to find evidence in support of income convergence, especially among developing countries, can be attributed to their inability to account for structural breaks in the data.

Suggested Citation

  • Emmanuel Anoruo & Ferdinand Nwafor, 2007. "Income Convergence in Developing Countries," The IUP Journal of Applied Economics, IUP Publications, vol. 0(6), pages 69-76, November.
  • Handle: RePEc:icf:icfjae:v:06:y:2007:i:6:p:69-76

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    References listed on IDEAS

    1. Barone-Adesi, Giovanni & Whaley, Robert E, 1987. " Efficient Analytic Approximation of American Option Values," Journal of Finance, American Finance Association, vol. 42(2), pages 301-320, June.
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    4. Peter Carr & Robert Jarrow & Ravi Myneni, 2008. "Alternative Characterizations Of American Put Options," World Scientific Book Chapters,in: Financial Derivatives Pricing Selected Works of Robert Jarrow, chapter 5, pages 85-103 World Scientific Publishing Co. Pte. Ltd..
    5. Geske, Robert & Roll, Richard, 1984. " On Valuing American Call Options with the Black-Scholes European Formula," Journal of Finance, American Finance Association, vol. 39(2), pages 443-455, June.
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