Economic Convergence of the Countries in 1992-2022
Abstract
Economic science has always been concerned with the catch-up effect: are developing countries really catching up to technologically developed countries, and is the economic gap between rich and poor countries narrowing over the long run? The goal of this article is to test the hypothesis of economic convergence of countries as one of the primary research problems within the field of cross-country inequality. The objective of this research is to gain a deeper understanding of the factors that contribute to economic cross-country inequality. This article seeks to ascertain the impact of country convergence, as postulated by R. Solow in his model of economic growth, utilizing R. Barro’s equations for the period from 1992 to 2021/22. The paper reveals the existence of economic convergence, but at a rate that is insufficient for developing countries to catch up to developed countries in a meaningful way. The dynamics of convergence by decade is analyzed separately. It is found that convergence was as slow as possible in the period between 2002 and 2011 and as fast as possible in the period between 2012 and 2022. The economic shocks of 2020-2022 may undermine the catching-up potential of many developing countries, which may result in a slowing of further convergence.
Downloads
References
Acemoglu, D., 2022. Cross-Country Inequality Trends. NBER Working Paper. No. 8832. P. 1-42.
Acemoglu, D., Robinson, J., 2012. Why Nations Fail: The Origins of Power, Prosperity, and Poverty. N.Y.: Crown Publishers.
Aslund, A., 2009. Baltic protests and financial meltdowns. Peterson Institute for International Economics. Available at: https://www.piie.com/commentary/op-eds/baltic-protests-and-financial-meltdowns
Attenborough, D., Lagarde, K., 2019. The Greatest Balancing Act. IMF. Finance & Development. P. 5.
Barro, R. J., 1999. Inequality and growth in a panel of countries. Journal of Economic Growth. Vol. 5. No. 1. P. 5-32.
Barro, R. J., 2016. Economic growth and convergence, applied especially to China. National Bureau of Economic Research. Working Paper 21872. P. 1-24.
Barro, R. J., Sala-i-Martin, X., 1992. Convergence. Journal of Political Economy. Vol. 100. No. 2. P. 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. Vol. 22. No. 1. P. 107-182.
Barro, R., 2013. Education and economic growth. Annals of Economics and Finance. Vol. 1. Issue 2. P. 301-328.
Barro, R.J., 2012. Convergence and modernization revisited. National Bureau of Economic Research. Working Paper 18295. P. 1-68.
Barro, R.J., Sala-i-Martin, X., 1990. Economic growth and convergence across the United States. National Bureau of Economic Research: Working Paper. No. 3419. P. 1-39.
Daly, K., Gedminas, T., 2022. The Path to 2075 – Slower Global Growth, But Convergence Remains Intact. Goldman Sachs. Global Economics Paper. P. 1-45.
Dementieva, A. A., 2021. Convergence theories in the history of economic science. Moscow Economic Journal. No 7. P. 506-516 (in Russian).
Diamond, J., 1997. Guns, Germs, and Steel: The Fates of Human Societies. W.W. Norton.
Franks, J., Barkbu, B., Blavy, R., Oman, W., Schoelermann, H., 2018. Economic Convergence in the Euro Area: Coming Together or Drifting Apart? IMF Working Paper. No. 10. P. 1-47.
Galor, O., 1996. Convergence? Inferences from theoretical models. Economic Journal. Vol. 106. Issue 437. P. 1056-1069.
Gasiorowski, M.T., 1995. Economic crisis and political regime change: An event history analysis. The American Political Science Review. Vol. 89. No. 4. P. 882-897.
Grigoryev, L. M., 2020. Global social drama of pandemic and recession. Population and Economics. No 4(2). P. 18-25.
Grigoryev, L. M., 2023. The Shocks of 2020-2023 and the Business Cycle. Contemporary World Economy. 2023. Vol. 1. No 1(1).
Grigoryev, L. M., Kurdin, A. A., Makarov, I. A. (eds), 2022. The World Economy in a Period of Big Shocks. Moscow: INFRA-M. (in Russian).
Grigoryev, L. M., Makarova, E. A.,2019. Capital accumulation and economic growth after the Great Recession. Voprosy Ekonomiki, No 12. P. 24-46 (in Russian).
Grigoryev, L. M., Maykhrovitch, M. Y., 2023. Growth theories: The realities of the last decades (Issues of sociocultural codes — to the expansion of the research program). Voprosy Ekonomiki. No 2. P. 18-42 (in Russian).
Grigoryev, L. M., Salmina, A.A., 2013. “Structure” of social inequality of the modern world: problems of measurement. Sociological Journal, No 3. P. 5-21 (in Russian).
IMF, 2019. Global Manufacturing Downturn, Rising Trade Barriers. Washington, DC: International Monetary Fund. Available at: https://www.imf.org/en/Publications/WEO/Issues/2021/01/26/2021-world-economic-outlook-update
IMF, 2021. World Economic Outlook: Policy Support and Vaccines Expected to Lift Activity. Washington, DC: International Monetary Fund. Available at: https://www.imf.org/en/Publications/WEO/Issues/2021/01/26/2021-world-economic-outlook-update
IMF, 2022. World Economic Outlook: Rising Caseloads, A Disrupted Recovery, and Higher Inflation. Washington, DC: International Monetary Fund. Available at: https://www.imf.org/en/Publications/WEO/Issues/2022/01/25/world-economic-outlook-update-january-2022
IMF, 2023. World Economic Outlook: Rising Caseloads, A Disrupted Recovery, and Higher Inflation. Washington, DC: International Monetary Fund. Available at: https://www.imf.org/en/Publications/WEO
IMF, 2020. World Economic Outlook: A Long and Difficult Ascent. Washington, DC: International Monetary Fund. Available at: https://www.imf.org/en/Publications/WEO/Issues/2021/01/26/2021-world-economic-outlook-update
Inglehart, R., Welzel, C., 2009. Modernization, Cultural Change, and Democracy: The Human Development Sequence. Cambridge University Press.
Jorda, V., Sarabia, J.M., 2015. International Convergence in Well-Being Indicators. Social Indicators Research. Vol. 120. No. 1. P. 1-27.
Kanellopoulos, K., Kousis, M., 2018. Protest, elections and austerity politics in Greece. In: Placas, A., Doxiadis, E. (eds). Living Under Austerity: Greek Society in Crisis. New York: Berghahn Press. P. 90-112.
Katada, S.N., 2013. Financial crisis fatigue? Politics behind Japan’s post-global financial crisis economic contraction. Japanese Journal of Political Science. Vol. 14. Issue 2. P. 223-242.
Kónya, L., Guisan, M. C., 2008. What does the human development index tell us about convergence? Applied Econometrics and International Development. No. 8. P. 19-40.
Lucas Jr., R., 2015. Human Capital and Growth. American Economic Review. Vol. 105. No. 5. P. 85-88.
Mazumdar, K., 2003. Do Standards of Living Converge? A Cross-country Study. Social Indicators Research. Vol. 64. P. 29-50.
Morozkina, A. K., Maichrovich, M.-Y. Y., Levina, V. A., 2024. Factors of vulnerability and resilience of developing countries during crises and their practical reflection on the example of shocks in 2020-2022 (in press).
Morozkina, A.K., 2019. Official Development Aid: Trends of the Last Decade. World Economy and International Relations. 2019. Vol. 63. No 9. P. 86-92 (in Russian).
Mozias, P. M., 2023. Russia in the BRICS Community: Choosing Priorities. Social and Humanities. Domestic and Foreign Literature. Series 9: Oriental Studies and African Studies. No 2. P. 37-66 (in Russian).
Nordhaus, W., 2017. Projections and uncertainties about climate change in an era of minimal climate policies. NBER Working Paper. No. 22933. P. 1-50.
Olafsson, S., 2016. Political turmoil in Iceland. Nordiques. No. 32. P. 29-42.
Paprotny, D., 2021. Convergence Between Developed and Developing Countries: A Centennial Perspective. Social Indicators Research. Vol. 153. P.193-225.
Podrugina, A. V., Lysenko, K. V., 2023. The Return of the World Economy to a High Inflation Regime. International Organisations Research Journal. Vol. 18. No 3.
Pritchett, L., 1997. Divergence, big time. Journal of Economic Perspectives. Vol. 11. No. 3. P. 3-17.
Rebello, J., Young, D. W., 2022. Global Growth to Slow through 2023, Adding to the Risk of ‘Hard Landing’ in Developing Economies. The World Bank press release No. 038.
Romer, P.M., 1990. Endogenous Technological Change. Journal of Political Economy. Vol. 98. No. 5. Part 2: The Problem of Development: A Conference of the Institute for the Study of Free Enterprise Systems. P. 71-102.
Samarasinghe, T., 2019. The relationship between institutions and economic development. MPRA Paper. No. 97755. P. 1-17.
Solarin, S.A., Erdogan, S., Pata, U.K., 2023. Convergence of Income Inequality in OECD Countries Since 1870: A Multi-Method Approach with Structural Changes. Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement. Vol. 166. P. 601-626.
Solow, R.M., 1956. A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics. Vol. 70. No. 1. P. 65-94.
World Bank (n.d.) World Development Indicators. Available at: https://databank.worldbank.org/source/world-development-indicators (date of access 20 March 2023).