[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/rfh/bbejor/v9y2020i2p60-73.html
   My bibliography  Save this article

Testing The Convergence Hypothesis In Solow Growth Model: A Statistical Evidence From Saarc Economies

Author

Listed:
  • MUHAMMAD SAFDAR

    (Pakistan Institute of Development Economics, Islamabad Pakistan, Email: safdar.qau890@gmail.com)

  • AHMAD NAWAZ

    (Department of Economics, University of Sahiwal, Sahiwal, Pakistan, Email: ahmadnawaz@uosahiwal.edu.pk)

Abstract
The literature reveals three concepts of convergence, namely Absolute/Unconditional Beta convergence, Sigma convergence, and Conditional Beta convergence. Annual data of real GDP per capita over the period 1972-2012 of six SAARC countries has been utilized to test the convergence hypotheses. OLS estimates from the cross-sectional data revealed that there is no evidence of sigma convergence. A panel data approach has also been applied to test the convergence of real GDP per capita among six SAARC countries. Empirical results from both Levin, Lin, and Chu and the Hadri z-stat showed no evidence of convergence among the SAARC countries. Thus, the results of our study are not consistent with the basic growth model of Solow-Swan (1956) which posits the existence of conditional convergence of income among developed and developing economies.

Suggested Citation

  • Muhammad Safdar & Ahmad Nawaz, 2020. "Testing The Convergence Hypothesis In Solow Growth Model: A Statistical Evidence From Saarc Economies," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 9(2), pages 60-73, June.
    • Handle: RePEc:rfh:bbejor:v:9:y:2020:i:2:p:60-73
    as

    Download full text from publisher

    File URL: https://bbejournal.com/index.php/BBE/article/view/125/79
    Download Restriction: no
    File URL: https://bbejournal.com/index.php/BBE/article/view/125
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Azomahou, Théophile T. & El ouardighi, Jalal & Nguyen-Van, Phu & Pham, Thi Kim Cuong, 2011. "Testing convergence of European regions: A semiparametric approach," Economic Modelling, Elsevier, vol. 28(3), pages 1202-1210, May.
    2. Sala-i-Martin, Xavier X., 1996. "Regional cohesion: Evidence and theories of regional growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1325-1352, June.
    3. Sala-i-Martin, Xavier X, 1996. "The Classical Approach to Convergence Analysis," Economic Journal, Royal Economic Society, vol. 106(437), pages 1019-1036, July.
    4. Martin Carree & Luuk Klomp, 1997. "Testing The Convergence Hypothesis: A Comment," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 683-686, November.
    5. Evans, Paul & Kim, Ji Uk, 2005. "Estimating convergence for Asian economies using dynamic random variable models," Economics Letters, Elsevier, vol. 86(2), pages 159-166, February.
    6. Tosun, Jale, 2012. "Emergency oil stocks in Southeastern and Eastern Europe: What explains variation in convergence towards the EU model?," Energy Policy, Elsevier, vol. 46(C), pages 417-426.
    7. Juncal Cunado, 2011. "Structural Breaks and Real Convergence in Opec Countries," Journal of Applied Economics, Taylor & Francis Journals, vol. 14(1), pages 101-117, May.
    8. Arbia, Giuseppe & Battisti, Michele & Di Vaio, Gianfranco, 2010. "Institutions and geography: Empirical test of spatial growth models for European regions," Economic Modelling, Elsevier, vol. 27(1), pages 12-21, January.
    9. Arnold, Jens & Bassanini, Andrea & Scarpetta, Stefano, 2011. "Solow or Lucas? Testing speed of convergence on a panel of OECD countries," Research in Economics, Elsevier, vol. 65(2), pages 110-123, June.
    10. Andrew T. Young & Matthew J. Higgins & Daniel Levy, 2008. "Sigma Convergence versus Beta Convergence: Evidence from U.S. County‐Level Data," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(5), pages 1083-1093, August.
    11. Fung, Michael K. & Cheng, Arnold C.S., 2010. "Convergence of total factor productivity among banks: Hong Kong's experience," Global Finance Journal, Elsevier, vol. 21(2), pages 201-210.
    12. Manca, Fabio, 2010. "Technology catch-up and the role of institutions," Journal of Macroeconomics, Elsevier, vol. 32(4), pages 1041-1053, December.
    13. Mark Skidmore & Steven Deller, 2008. "Is Local Government Spending Converging?," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 34(1), pages 41-55, Winter.
    14. Chowdhury, Khorshed, 2004. "Convergence of Per Capita GDP Across SAARC Countries," Economics Working Papers wp04-07, School of Economics, University of Wollongong, NSW, Australia.
    15. Kankesu Jayanthakumaran & Shao-Wei Lee, 2013. "Evidence on the Convergence of Per Capita Income: A Comparison of Founder Members of the A ssociation of S outh E ast A sian N ations and the S outh A sian A ssociation of R egional C ooperation," Pacific Economic Review, Wiley Blackwell, vol. 18(1), pages 108-121, February.
    16. Meng, Ming & Payne, James E. & Lee, Junsoo, 2013. "Convergence in per capita energy use among OECD countries," Energy Economics, Elsevier, vol. 36(C), pages 536-545.
    17. Lee, Jaehwa, 2009. "Trade, FDI, and productivity convergence: A dynamic panel data approach in 25 countries," Japan and the World Economy, Elsevier, vol. 21(3), pages 226-238, August.
    18. Quah, Danny T., 1996. "Empirics for economic growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1353-1375, June.
    19. Eatzaz Ahmad & Amber Naz, 2000. "An Empirical Analysis of Convergence Hypothesis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 39(4), pages 729-740.
    20. Miller, Stephen M. & Upadhyay, Mukti P., 2002. "Total factor productivity and the convergence hypothesis," Journal of Macroeconomics, Elsevier, vol. 24(2), pages 267-286, June.
    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. Li, Kui-Wai & Zhou, Xianbo & Pan, Zhewen, 2016. "Cross-country output convergence and growth: Evidence from varying coefficient nonparametric method," Economic Modelling, Elsevier, vol. 55(C), pages 32-41.
    2. Paul Johnson & Chris Papageorgiou, 2020. "What Remains of Cross-Country Convergence?," Journal of Economic Literature, American Economic Association, vol. 58(1), pages 129-175, March.
    3. Tang, Pan & Zhang, Ying & Baaquie, Belal E. & Podobnik, Boris, 2016. "Classical convergence versus Zipf rank approach: Evidence from China’s local-level data," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 443(C), pages 246-253.
    4. Sakari Lähdemäki, 2024. "Cross-country convergence: to be or not to be, that is the question," Empirical Economics, Springer, vol. 67(2), pages 839-875, August.
    5. Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers dp0280, Centre for Economic Performance, LSE.
    6. repec:bla:jcmkts:v:48:y:2010:i::p:529-556 is not listed on IDEAS
    7. Wang, Na & Fu, Xiaodong & Wang, Shaobin & Yang, Hao & Li, Zhen, 2022. "Convergence characteristics and distribution patterns of residential electricity consumption in China: An urban-rural gap perspective," Energy, Elsevier, vol. 254(PB).
    8. Uzma Zia, 2019. "An Evidence of Diverging SAARC Economies," PIDE-Working Papers 2019:170, Pakistan Institute of Development Economics.
    9. Daly, Vince & Khan, Ghulam Yahya, 2016. "Growth Convergence and Convergence Clubs in SAARC," Economics Discussion Papers 2016-1, School of Economics, Kingston University London.
    10. Ben Fine, 1998. "Endogenous Growth Theory: A Critical Assessment," Working Papers 80, Department of Economics, SOAS University of London, UK.
    11. Azomahou, Théophile T. & El ouardighi, Jalal & Nguyen-Van, Phu & Pham, Thi Kim Cuong, 2011. "Testing convergence of European regions: A semiparametric approach," Economic Modelling, Elsevier, vol. 28(3), pages 1202-1210, May.
    12. Çınar Tuğrul, 2017. "Spatial Dimensions of Sectoral Labor Productivity Convergence in Turkey: A Spatial Panel Data Approach," Review of Middle East Economics and Finance, De Gruyter, vol. 13(1), pages 1-14, April.
    13. Elena Mădălina OPRIȚESCU, 2017. "Econometric Assessment of the Degree of Economic Convergence between Member States of the European Union," Finante - provocarile viitorului (Finance - Challenges of the Future), University of Craiova, Faculty of Economics and Business Administration, vol. 1(19), pages 136-144, November.
    14. Carlos Mendez & Felipe Santos‐Marquez, 2021. "Regional convergence and spatial dependence across subnational regions of ASEAN: Evidence from satellite nighttime light data," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(6), pages 1750-1777, December.
    15. Sakari Lähdemäki, 2017. "Traditional convergence tests with Penn World Table 9.0," Working Papers 309, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    16. Zbigniew Golas, 2019. "Labour Productivity Growth and Convergence in Agriculture of the European Union," International Journal of Economics and Financial Issues, Econjournals, vol. 9(4), pages 11-17.
    17. Kaitila, Ville, 2003. "Convergence of Real GDP per Capita in the EU15 area: How do the Accession Countries Fit in ?," Discussion Papers 865, The Research Institute of the Finnish Economy.
    18. Kutub Uddin & Zohurul Anis & Muhammad Jakir Hossain & Zohurul Islam Shamol, 2016. "Examining Convergence in Per Capita Agricultural Production across Selected Asian countries," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(10), pages 178-194, October.
    19. Ucler, Gulbahar & Bulut, Umit, 2021. "Re-examination of the Convergence in Military Expenditures across NATO Countries: Do Different Approximations in Modeling Structural Breaks Matter?," Asian Journal of Applied Economics/ Applied Economics Journal, Kasetsart University, Faculty of Economics, Center for Applied Economic Research, vol. 28(1), pages 43-62, June.
    20. Seonyoung Park & Donggyun Shin, 2023. "Recent changes in the nature of the distribution dynamics of the US county incomes," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 38(7), pages 1048-1067, November.
    21. Bertola, Giuseppe, 2000. "Macroeconomics of distribution and growth," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 9, pages 477-540, Elsevier.

    More about this item

    Keywords

    Beta convergence; Sigma convergence; Solow; SAARC; IFS;
    All these keywords.

    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
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

    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:9:y:2020:i:2:p:60-73. 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 (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.