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Spatial dependence in the growth process and implications for convergence rate: Evidence on Vietnamese provinces

Listed author(s):
  • Esiyok, Bulent
  • Ugur, Mehmet

Existing studies on Vietnamese provinces (e.g., Anwar and Nguyen, 2010) tend to assume that province-specific growth is independent of that in its neighbours. However, many studies analysing regional economic growth in China, Brazil and Mexico report the existence of spatial spill-over effects. This paper investigates whether this is the case for 60 Vietnamese provinces for the time-period 1999-2010, using a system-GMM estimator and a Solow growth model augmented with human and physical capital and spatial lag covariates. We report that spatial dependence is a significant determinant of growth and conditional convergence in Vietnamese provinces. We also demonstrate that the rate of convergence decreases as the distance between neighbouring provinces increases. Given these findings, we recommend testing for spatial dependence in growth models for Vietnam and beyond to avoid omitted variable bias and inform evidence-based regional policies that take account of spatial externalities.

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File URL: http://gala.gre.ac.uk/17507/7/17507%20UGUR_Spatial_Dependence_in_the_Growth_Process_2017.pdf
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Paper provided by University of Greenwich, Greenwich Political Economy Research Centre in its series Greenwich Papers in Political Economy with number 17507.

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Date of creation: 17 Jul 2017
Handle: RePEc:gpe:wpaper:17507
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