Investigating the Heterogeneity of Economic Convergence in Latin America Countries - An Econometric Analysis of Systems of Regression Equations
DOI:
https://doi.org/10.47872/laer-2020-29-6Keywords:
convergence, labour productivity, economic growth, SURE, Latin AmericaAbstract
For a selected group of Latin America countries we estimated the parameters of convergence equations on the basis of annual data. We test cross-country heterogeneity of parameters within a system of Seemingly Unrelated Regression Equations (SURE) that departures from standard approach utilizing panel regressions. We show empirical evidence in favor of the variability of parameters describing the convergence effect and productivity growth rates across analyzed club of countries. We also test several restrictions leading to less parameterized models imposing constancy of parameters of interest across countries.
References
Abreu, M., De Groot, H. L., & Florax, R. J. (2005). A Meta-Analysis of β-Convergence: the Legendary 2%. Journal of Economic Surveys, 19(3), 389–420.
Arbia, G., Le Gallo, J., & Piras, G. (2008). Does evidence on regional economic convergence depend on the estimation strategy? Outcomes from analysis of a set of NUTS2 EU regions. Spatial economic analysis, 3(2), 209-224.
Barro, R. J., & Sala-i-Martin, X. (1990). Economic growth and convergence across the United States (No. w3419). National Bureau of Economic Research.
Barro, R. J., & Sala-i-Martin, X. (1992). Convergence. Journal of Political Economy, 100(2), 223–251.
Barro, R. J., Sala-i-Martin, X., Blanchard, O. J., & Hall, R. E. (1991). Convergence across states and regions. Brookings papers on economic activity, 107-182.
Barro, R.J. (1997). Determinants of Economic Growth. A cross-country empirical study, MIT Press.
Barro, R.J., & Sala-i-Martin, X., (1995) Economic Growth, McGraw-Hill, New York.
Bernard, A. B., & Durlauf, S. N. (1995). Convergence in international output. Journal of applied econometrics, 10(2), 97-108.
Borsi, M. T., & Metiu, N. (2015). The evolution of economic convergence in the European Union. Empirical Economics, 48(2), 657–681.
Brada, J C. (1989). Technological Progress and Factor Utilization in Eastern European Economic Growth, Economica, 56 (224), 433–48 Çolak, O. (2015). Convergence revisited: case of EU and Eastern Europe, Regional Science Inquiry, VII (1), 69–81.
Caldentey, E. P. (2012). Income convergence, capability divergence, and the middle income trap: An analysis of the case of Chile. Studies in Comparative International Development, 47(2), 185-207.
Dobson, S., & Ramlogan, C. (2002). Convergence and divergence in Latin America, 1970-1998. Applied Economics, 34(4), 465-470.
Dobson, S., & Ramlogan, C. (2002). Economic growth and convergence in Latin America. Journal of Development Studies, 38(6), 83-104.
Dobson, S., Ramlogan, C., & Strobl, E. (2006). Why do rates of β-convergence differ? A meta-regression analysis, Scottish Journal of Political Economy 53(2), 153–173.
Drennan, M. P., Lobo, J., & Strumsky, D. (2004). Unit root tests of sigma income convergence across US metropolitan areas. Journal of Economic Geography, 4(5), 583-595.
Dvorokova, K. (2014). Sigma versus Beta-Convergence in EU28 in Financial Crisis and Post-Crisis Period. Mathematical Methods in Finance and Business Administration, 11, 88-94.
Escobari, D. (2004). Testing for Stochastic and β-Convergence in Latin American Countries. Applied Econometrics and International Development, 11(2). http://dx.doi.org/10.2139/ssrn.924064
Feenstra, R. C., Inklaar, R., & Timmer, M. P. (2015). The next generation of the Penn World Table. American Economic Review, 105(10), 3150-82.
Ferreira, A. (2000). Convergence in Brazil: recent trends and long-run prospects. Applied Economics, 32(4), 479-489.
Forgó, B., & Jevcák, A. (2015). Economic convergence of central and Eastern European EU member states over the last decade (2004-2014). Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
Fritsche, U., & Kuzin, V. (2011). Analysing convergence in Europe using the non-linear single factor model. Empirical Economics, 41, 343–369.
Galvao Jr, A. F., & Reis Gomes, F. A. (2007). Convergence or divergence in Latin America? A time series analysis. Applied Economics, 39(11), 1353-1360.
Gill, I., & Raiser, M. (2012). Golden Growth: Restoring the Lustre of the European Economic Model, World Bank, Washington, DC.
Gligorić, M. (2014). Paths of income convergence between country pairs within Europe. Economic Annals, 59(201), 123–156.
González, G. H., Dabús, C. D., & Monterubbianesi, P. D. (2013). Phases of convergence in Latin America: The technological drivers. Journal of International Development, 25(7), 1005-1025.
Greta, M., & Lewandowski, K. (2015). The Impact Of The Global Financial And Economic Crisis Convergence Process In OECD Countries. Comparative Economic Research, 18(1), 81–96.
Halmai, P., & Vásáry, V. (2012). Convergence crisis: economic crisis and convergence in the European Union. International Economics and Economic Policy, 9(3-4), 297–322.
Hidalgo, C. A., & Hausmann, R. (2009). The building blocks of economic complexity. Proceedings of the National Academy of Sciences, 106(26), 10570–10575.
Holmes, M. (2006). Regime-dependent output convergence in Latin America. Estudios de EconomÃa, 33(1), 65-81.
Hopenhayn, H., & Neumeyer, P. (2004). Latin America in the XXth century: stagnation, then collapse. research memo.
Islam, N. (1995). Growth empirics: a panel data approach. The Quarterly Journal of Economics, 110(4), 1127-1170.
Thomas, I. P. (1995). Konvergenz und Divergenz in der Europäischen Union: theoretischer Überblick, empirische Evidenz und wirtschaftspolitische Implikationen (No. 682). Kiel Working Paper.
Kacprzyk, A. (2016). Economic freedom–growth nexus in European Union countries. Applied Economics Letters, 23(7), 494–497.
Kaitila, V. (2014). Transnational Income Convergence and National Income Disparity: Europe, 1960~ 2012. Journal of Economic Integration, 29(2), 343–371.
Kim, C. J., & Piger, J. (2002). Common stochastic trends, common cycles, and asymmetry in economic fluctuations. Journal of Monetary Economics, 49(6), 1189–1211.
King, A., & Ramlogan, C. (2008). Is Latin America Catching Up? A Timeâ€Series Approach. Review of Development Economics, 12(2), 397-415.
King, A., & Ramlogan-Dobson, C. (2015). International income convergence: Is Latin America actually different?. Economic Modelling, 49, 212-222.
King, A., & Ramlogan-Dobson, C. (2016). Is there club convergence in Latin America?. Empirical Economics, 51(3), 1011-1031.
Kumo, W. L. (2011). Working Paper 130-Growth and Macroeconomic Convergence in Southern Africa (No. 314).
Kuscevic, C. M. M., & del RÃo Rivera, M. A. (2014). Convergencia en Bolivia: un enfoque espacial con datos de panel dinámicos. Revista de economÃa del Rosario, 16(2), 233-256.
Law, S. H., Lim, T. C., & Ismail, N. W. (2013). Institutions and economic development: A Granger causality analysis of panel data evidence. Economic Systems, 37(4), 610–624.
Mankiw, N. G, Romer, D., & D. N. Weil. (1992), A contribution to the empirics of economic growth, The Quarterly Journal of Economics, 107.2 (1992), 407–437.
Marelli, E., & Signorelli, M. (2015). Convergence, Crisis and Unemployment in Europe: The Need for Innovative Policies. Croatian Economic Survey, 17(2), 5–56.
Martin, C., & Sanz, I. (2003). Real convergence and European integration: the experience of the less developed EU members. Empirica, 30(3), 205-236.
Mathur, S. K. (2005). Absolute convergence, its speed and economic growth for selected countries for 1961-2001. Korea and the World Economy, 6(2), 245-273.
Olszak M., Pipień M. (2016) Cross Country Linkages as Determinants of Procyclicality of Loan Loss Provisions, European Journal of Finance 22 (11), 965-984
Onaran, O. (2008). Jobless growth in the central and east European countries: a country-specific panel data analysis of the manufacturing industry. Eastern European Economics, 46(4), 90–115
Özgüzer, G., & Oğuş-Binatlı, A. (2016). Economic Convergence in the EU: A Complexity Approach. Eastern European Economics, 54(2), 93–108.
Penn World Table (2014), version 9.0, available at: https://www.rug.nl/ggdc/productivity/pwt/pwt-releases/pwt9.0, (DOI: 10.15141/S5J01T)
Pesaran, M. H. (2007). A pair-wise approach to testing for output and growth convergence. Journal of Econometrics, 138, 312–355.
Phillips, P. C., & Sul, D. (2007). Transition modeling and econometric convergence tests. Econometrica, 75(6), 1771–1855.
Phillips, P. C., & Sul, D. (2009). Economic transition and growth. Journal of Applied Econometrics, 24(7), 1153-1185.
Pipień M., Roszkowska S. (2018) Heterogeneity of Convergence in Transition Countries, Post-Communist Economies (forthcoming)
Próchniak M., & Witkowski B. (2016) On the Use of Panel Stationarity Tests in Convergence Analysis: Empirical Evidence for the EU Countries, Equilibrium, 11(1), 77–96.
Próchniak, M., & Witkowski, B. (2013). Real β-Convergence of Transition Countries: Robust Approach. Eastern European Economics, 51(3), 6–26.
Quah, D. (1993). “Empirical Cross-Section Dynamics in Economic Growthâ€, European Economic Review, 37, (2–3), 1353–1375.
Quah, D. (1996), “Empirics for Economic Growth and Convergenceâ€, European Economic Review, 40, 1353-1375.
Quah, D. (1997), “Empirics for Growth and Distribution. Stratification, Polarization and Convergence Clubsâ€, Journal of Economic Growth, 2, 27-59.
Rapacki R., & Próchniak M. (2009) Real beta and sigma convergence in 27 transition countries, 1990–2005, Post-Communist Economies, 21(3), 307–326.
RodrÃguez-Benavides, D., López-Herrera, F., & Venegas-MartÃnez, F. (2014). Are there Economic Convergence Clubs in Latin America?, Journal of Economics and Development Studies, 2(3), 113-123.
Rogut, A., & Roszkowska, S. (2006) Konwergencja warunkowa w krajach transformacji [Conditional Convergence in Transition Countries], Gospodarka Narodowa, 9, 35–55
Romer, P. M. (1989). Human capital and growth: theory and evidence (No. w3173). National Bureau of Economic Research.
Sanz-Villarroya, I. (2005). The convergence process of Argentina with Australia and Canada: 1875–2000. Explorations in Economic History, 42(3), 439-458.
Siljak, D. (2015). Real economic convergence in the European Union from 1995 to 2013. The Business & Management Review, 6(4), 213.
Slaughter, M.J. (1997). Per Capita Income Convergence and the Role of International Trade. National Bureau of Economic Research Working Paper, 5897. DOI: 10.3386/w5897.
Solimano, A., & Soto, R. (2005). Economic growth in Latin America in the late 20th century: evidence and interpretation(Vol. 33). United Nations Publications.
Strielkowski, W., & Höschle, F. (2016) Evidence for economic convergence in the EU: The analysis of past EU enlargements, Technological and Economic Development of Economy, 22(4), 617–630.
Sutton, M. B., Lindow, G., Serra, M. I., Ramirez, G., & Pazmino, M. F. (2006). Regional Convergence in Latin America (No. 6-125). International Monetary Fund.
Taylor, A. M. (1992). External dependence, demographic burdens, and Argentine economic decline after the Belle Epoque. The Journal of Economic History, 52(4), 907-936.
Vojinović, B., Oplotnik, Ž. J., & Próchniak, M. (2010). EU enlargement and real economic convergence. Post-Communist Economies, 22(3), 303–322.
Young, A. T., Higgins, M. J., & Levy, D. (2008). Sigma convergence versus beta convergence: Evidence from US countyâ€level data. Journal of Money, Credit and Banking, 40(5), 1083-1093.
Young, A. T., Higgins, M. J., & Levy, D. (2013). Heterogeneous convergence. Economics Letters, 120(2), 238–241.
Zellner, A., (1962) An efficient method of estimating seemingly unrelated regressions and tests for aggregation bias, Journal of the American Statistical Association, 57(298), 348–368.
Downloads
Published
Issue
Section
License
Copyright (c) 2020 Dawid Jarco, Mateusz Pipień
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
LAER Copyright and License
Authors submitting articles to Latin American Economic Review (LAER), automatically grant this journal a license to publish. Copyright of all published material remains with the authors, who can reuse it in future work without needing to make reference to LAER. Similarly, any other contribution of material to the website (for example text, photographs, graphics, video or audio) automatically grants us a right to publish. Copyright, however, remains with the author(s).
Authors release their work under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY-NC-ND 4.0). This license allows anyone to copy, distribute and transmit the work, provided the use has no derivatives, is non-commercial and appropriate credit to the author(s) is given. (If you remix, transform, or build upon the material, you may not distribute the modified material.)
A human-readable summary of the licence:
https://creativecommons.org/licenses/by-nc-nd/4.0/
Full legal text: