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The convergence of Chilean regions, 1960-2009

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  • Alejandro Corvalán
  • Danilo Pezo

Abstract

In this paper we analyze fifty years of economic convergence for the regions of Chile, in a context of radical political changes associated with deep economic transformations. For the analysis of convergence of GDP per capita, the sub-periods 1960-1973, 1973-1989 and 1989-2009 were considered, while the sub-periods 1976-1989 and 1989-2009 were considered for the variable productivity. The analysis was carried out using the definitions of absolute ß convergence and s convergence, and using cross-section and panel data. The panel estimates suggest a process of ß convergence for the entire period 1960-2009, 55 years to reduce half of the gap. However, the s-convergence analysis shows a reduction of dispersion in the fifty years, with a decelerating tendency since 1990. In addition, the distributions of annual productivity and GDP were estimated using kernel functions. These distributions show persistent regional inequality, especially since 1985 when the phenomenon of bimodality (i.e., a gap between certain regions with higher income levels and those with lower levels) emerges. These results indicate slow adjustment to changes in regional economies and low market effectiveness in solving regional disparities. As a consequence, the convergence of Chilean regions is an unresolved issue in public policy in Chile.

Suggested Citation

  • Alejandro Corvalán & Danilo Pezo, 2012. "The convergence of Chilean regions, 1960-2009," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 76, pages 143-176.
  • Handle: RePEc:lde:journl:y:2012:i:76:p:143-176
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    Keywords

    Economic growth; convergence; GDP per capita; productivity; inequality;

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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