IDEAS home Printed from https://ideas.repec.org/a/rfh/bbejor/v13y2024i1p89-104.html

Convergence Hypothesis and Economic Growth in ECO Countries: An Insight from MM-QR Approach

Author

Listed:
  • Muhammad Ramzan Sheikh

    (Professor of Economics, School of Economics, Bahauddin Zakariya University Multan, Pakistan)

  • Iram Mushtaq

    (MPhil Scholar, School of Economics, Bahauddin Zakariya University Multan, Pakistan)

  • Asad Abbas

    (Lecturer in Economics, Department of Economics, COMSATS University Islamabad Vehari Campus, Pakistan)

  • Sana Sultan

    (PhD Student, School of Economics, Bahauddin Zakariya University, Multan, Pakistan)

Abstract

This study assesses the convergence hypothesis and economic growth in ECO countries spanning from 1990 to 2021. Employing the MM-QR technique, it investigates the relationship between various factors and GDP growth. The study incorporates gross fixed capital formation, life expectancy, the effective rate of depreciation, secondary school enrollment, and the initial logarithm of GDP per capita as independent variables, with GDP growth as the dependent variable. Two distinct measures are employed: absolute convergence and relative convergence. Absolute convergence analysis reveals a positive and statistically significant trend. It indicates that poorer nations are experiencing higher growth rates compared to their wealthier counterparts. Moreover, the study investigates sigma convergence, explaining that the standard deviation of per capita income during the first and second decades signifies the existence of sigma convergence. However, during the third decade, although sigma convergence persists, it lies between the levels observed in the first and second decades. The study points out the significance of implementing pertinent policies to bolster GDP growth. It emphasizes the need for targeted strategies aimed at fostering economic development within the ECO countries.

Suggested Citation

  • Muhammad Ramzan Sheikh & Iram Mushtaq & Asad Abbas & Sana Sultan, 2024. "Convergence Hypothesis and Economic Growth in ECO Countries: An Insight from MM-QR Approach," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 13(1), pages 89-104.
    • Handle: RePEc:rfh:bbejor:v:13:y:2024:i:1:p:89-104
    DOI: https://doi.org/10.61506/01.00213
    as

    Download full text from publisher

    File URL: https://bbejournal.com/BBE/article/view/693/640
    Download Restriction: no
    File URL: https://bbejournal.com/BBE/article/view/693
    Download Restriction: no
    File URL: https://libkey.io/https://doi.org/10.61506/01.00213?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Céline Bonnefond, 2014. "Growth dynamics and conditional convergence among Chinese provinces: a panel data investigation using system GMM estimator," Post-Print halshs-04202578, HAL.
    2. Ryszard Rapacki & Mariusz Prochniak, 2009. "Real beta and sigma convergence in 27 transition countries, 1990-2005," Post-Communist Economies, Taylor & Francis Journals, vol. 21(3), pages 307-326.
    3. Wang, Sun Ling & Huang, Jikun & Wang, Xiaobing & Tuan, Francis, 2019. "Are China’s regional agricultural productivities converging: How and why?," Food Policy, Elsevier, vol. 86(C), pages 1-1.
    4. Yilin Li & Jingbu Wang & Keunyeob Oh, 2022. "Effects of Globalization on the Convergence of Poverty Levels among Asian Countries," International Economic Journal, Taylor & Francis Journals, vol. 36(2), pages 193-205, April.
    5. Unal, Umut, 2014. "Economic Growth and Convergence across the OIC Countries," MPRA Paper 81439, University Library of Munich, Germany.
    6. Hashem Pesaran, M. & Yamagata, Takashi, 2008. "Testing slope homogeneity in large panels," Journal of Econometrics, Elsevier, vol. 142(1), pages 50-93, January.
    7. Alina-Petronela Haller & Gina Ionela Butnaru & Georgia-Daniela Tacu Hârșan & Mirela Ştefănică, 2021. "The relationship between tourism and economic growth in the EU-28. Is there a tendency towards convergence?," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 34(1), pages 1121-1145, January.
    8. Amjad Ali & Zohaib Ul Hasan & Qasim Abbasi & Fiaz Ahmad Sulehri, 2023. "Business Or Politics: Exploring The Determinants Of Policy Mix In South Asia," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 12(3), pages 114-123.
    9. Audi, Marc & Poulin, Marc & Ali, Amjad, 2023. "Determinants of Human Wellbeing and its Prospect Under the Role of Financial Inclusion in South Asian Countries," MPRA Paper 120119, University Library of Munich, Germany.
    10. Fung, Michael K., 2009. "Financial development and economic growth: Convergence or divergence?," Journal of International Money and Finance, Elsevier, vol. 28(1), pages 56-67, February.
    11. Somik V. Lall & Serdar Yilmaz, 2001. "Regional economic convergence: Do policy instruments make a difference?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 35(1), pages 153-166.
    12. Celine Bonnefond, 2014. "Growth Dynamics And Conditional Convergence Among Chinese Provinces: A Panel Data Investigation Using System Gmm Estimator," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 39(4), pages 1-25, December.
    13. repec:bla:obuest:v:61:y:1999:i:0:p:653-70 is not listed on IDEAS
    14. Athanasios Orphanides & Simon van Norden, 2002. "The Unreliability of Output-Gap Estimates in Real Time," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 569-583, November.
    15. Jan Ditzen, 2019. "xthst: Testing for slope homogeneity in Stata," CEERP Working Paper Series 011, Centre for Energy Economics Research and Policy, Heriot-Watt University.
    16. Rajesh Sharma, 2018. "Health and economic growth: Evidence from dynamic panel data of 143 years," PLOS ONE, Public Library of Science, vol. 13(10), pages 1-20, October.
    17. Zafar Iqbal & Ghulam Mustafa Zahid, 1998. "Macroeconomic Determinants of Economic Growth in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(2), pages 125-148.
    18. Damien Neven & Claudine Gouymte, 1995. "Regional Convergence in the European Community," Journal of Common Market Studies, Wiley Blackwell, vol. 33(1), pages 47-65, March.
    19. Mustafa Gömleksiz & Ahmet Şahbaz & Birol Mercan, 2017. "Regional Economic Convergence in Turkey: Does the Government Really Matter for?," Economies, MDPI, vol. 5(3), pages 1-16, July.
    20. Delgado, Mercedes & Porter, Michael E. & Stern, Scott, 2014. "Clusters, convergence, and economic performance," Research Policy, Elsevier, vol. 43(10), pages 1785-1799.
    21. M. Hashem Pesaran, 2015. "Testing Weak Cross-Sectional Dependence in Large Panels," Econometric Reviews, Taylor & Francis Journals, vol. 34(6-10), pages 1089-1117, December.
    22. Leo Michelis & Athanasios Papadopoulos & Gregory Papanikos, 2004. "Regional convergence in Greece in the 1980s: an econometric investigation," Applied Economics, Taylor & Francis Journals, vol. 36(8), pages 881-888.
    23. Bhattacharya, Mita & Inekwe, John N. & Sadorsky, Perry, 2020. "Convergence of energy productivity in Australian states and territories: Determinants and forecasts," Energy Economics, Elsevier, vol. 85(C).
    24. Sun, Huaping & Kporsu, Anthony Kwaku & Taghizadeh-Hesary, Farhad & Edziah, Bless Kofi, 2020. "Estimating environmental efficiency and convergence: 1980 to 2016," Energy, Elsevier, vol. 208(C).
    25. S. Nahar & B. Inder, 2002. "Testing convergence in economic growth for OECD countries," Applied Economics, Taylor & Francis Journals, vol. 34(16), pages 2011-2022.
    26. Gina Ionela Butnaru & Alina-Petronela Haller & Raluca Irina Clipa & Mirela Ștefănică & Mihaela Ifrim, 2020. "The Nexus Between Convergence of Conventional and Renewable Energy Consumption in the Present European Union States. Explorative Study on Parametric and Semi-Parametric Methods," Energies, MDPI, vol. 13(20), pages 1-19, October.
    27. Kaitila, Ville, 2004. "Integration and Conditional Convergence in the Enlarged EU Area," Discussion Papers 935, The Research Institute of the Finnish Economy.
    28. Peter Pedroni, 1999. "Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 653-670, November.
    29. Awaworyi Churchill, Sefa & Inekwe, John & Ivanovski, Kris, 2020. "Stochastic convergence in per capita CO2 emissions: Evidence from emerging economies, 1921–2014," Energy Economics, Elsevier, vol. 86(C).
    30. Joakim Westerlund & Mehdi Hosseinkouchack & Martin Solberger, 2016. "The Local Power of the CADF and CIPS Panel Unit Root Tests," Econometric Reviews, Taylor & Francis Journals, vol. 35(5), pages 845-870, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ioannis Kostakis & Sarantis Lolos, 2024. "Uncovering the impact of cultural heritage on economic growth: empirical evidence from Greek regions, 2000–2019," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 73(3), pages 1209-1239, October.
    2. George S. Chen & Emmanuel Kwaku Manu & Dennis Asante, 2023. "Achieving environmental sustainability in Africa: The role of financial institutions development on carbon emissions," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(5), pages 3272-3290, October.
    3. Kumar, Naveen & Maiti, Dibyendu, 2025. "Climate change, state capacity and uneven growth: A disaggregated analysis of India," Economic Modelling, Elsevier, vol. 153(C).
    4. Jin, Taeyoung, 2022. "Impact of heat and electricity consumption on energy intensity: A panel data analysis," Energy, Elsevier, vol. 239(PA).
    5. Beri, Parfait & Molem, Christopher Sama, 2024. "The impact of economic globalisation on labour market outcomes in Africa," MPRA Paper 122554, University Library of Munich, Germany.
    6. Olatunji A. Shobande & Simplice A. Asongu, 2021. "Financial Development, Human Capital Development and Climate Change in East and Southern Africa," Working Papers 21/042, European Xtramile Centre of African Studies (EXCAS).
    7. Kamalu, Kabiru & Wan Ibrahim, Wan Hakimah, 2022. "The Influence of Institutional Quality on Human Development: Evidence from Developing Countries," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 56(1), pages 93-105.
    8. Mohamed Yufenyuy & Saltuk Pirgalıoğlu & Orhan Yenigün, 2025. "The asymmetric effect of biomass energy use on environmental quality: empirical evidence from the Congo Basin," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(5), pages 10241-10274, May.
    9. Mounir Dahmani & Mohamed Mabrouki & Adel Ben Youssef, 2022. "ICT, trade openness and economic growth in Tunisia: what is going wrong?," Economic Change and Restructuring, Springer, vol. 55(4), pages 2317-2336, November.
    10. Mounir Dahmani & Mohamed Mabrouki & Adel Ben Youssef, 2021. "The ICT, Financial Development, Energy Consumption and Economic Growth Nexus in MENA Countries: Panel CS-ARDL Evidence," GREDEG Working Papers 2021-46, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    11. Khan, Zeeshan & Zhu, Xufeng & Chatti, Walid, 2025. "Environmental Poverty from the lens of sustainable development and financial inclusion: Evaluating the importance of energy productivity and clean energy electricity," Energy, Elsevier, vol. 318(C).
    12. Skare, Marinko & Gavurova, Beata & Sinkovic, Dean, 2025. "Measuring artificial intelligence's impact on sustainable energy transition: Empirical insights and policy implications," Energy Economics, Elsevier, vol. 150(C).
    13. Gillman, Max & Csabafi, Tamas Z. & Benk, Szilard & Matyas, Laszlo & Smith, Mitchell P. & Harris, Mark N., 2026. "Revisiting neoclassical growth theory: A primary role for inflation and capacity utilization," Economic Modelling, Elsevier, vol. 154(C).
    14. Tenaw, Dagmawe, 2025. "The dynamics of green energy, energy efficiency, economic productivity, and energy-driven emissions in SDG context: Is there a synergistic interplay?," Energy Economics, Elsevier, vol. 141(C).
    15. Duc Hong Vo, 2025. "Long-term effects of institutional quality on financial inclusion in Asia–Pacific countries," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 11(1), pages 1-26, December.
    16. Magrini, Stefano, 2004. "Regional (di)convergence," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 62, pages 2741-2796, Elsevier.
    17. Soto, Gonzalo H & Martinez-Cobas, Xavier, 2024. "Green energy policies and energy poverty in Europe: Assessing low carbon dependency and energy productivity," Energy Economics, Elsevier, vol. 136(C).
    18. Ibrahim A. Adekunle & Olukayode E. Maku & Tolulope O. Williams & Judith Gbagidi & Emmanuel O. Ajike, 2023. "Natural Resource Endowments and Growth Dynamics in Africa: Evidence from Panel Cointegrating Regression," Working Papers 23/015, European Xtramile Centre of African Studies (EXCAS).
    19. Kazuki Hara, 2024. "Dynamic heterogeneous panel analysis of financial market disciplinary effects on fiscal balance," International Journal of Economic Policy Studies, Springer, vol. 18(1), pages 37-62, February.
    20. Afef Bouattour & Maha Kalai & Kamel Helali, 2024. "The non-linear relationship between ESG performance and bank stability in the digital era: new evidence from a regime-switching approach," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-17, December.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rfh:bbejor:v:13:y:2024:i:1:p:89-104. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Muhammad Irfan Chani The email address of this maintainer does not seem to be valid anymore. Please ask Dr. Muhammad Irfan Chani to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/rffhlpk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.