Economic openness and income growth in developing countries: a regional comparative analysis

This article examines and compares the openness–growth relationship between the high-performing Asian economies (HPAEs) and the rest of the developing world (Sub-Saharan Africa-SSA, South East Asia-SEA and Latin America and Caribbean-LAC). We applied the SYS-GMM estimator to a dynamic standard endogenous growth model which relates economic openness to real per capita income growth. A few key findings emerged from this study. First, economic openness led to increase in real per capita GDP growth in HPAEs and SSA, but not in LAC and SEA. Second, openness to trade accelerated income convergence among countries in SSA, SEA, and HPAEs, however, whereas foreign direct investment inflows accelerated income convergence only in SSA, it rather de-accelerated income convergence in HPAEs. Thirdly, the HPAEs recorded higher positive effect of openness on real per capita GDP growth than any of the other developing regions because they created sufficient stock of human capital that enhanced their absorptive capacity of imported advanced technology. They also created a more stable macroeconomic environment which consolidated the income growth gains from openness. The results of this study highlight the importance of the implementation of policies that are complementary to economic openness in promoting economic growth in the developing world.     

TESTING CATCHING‐UP BETWEEN THE DEVELOPING COUNTRIES: “GROWTH RESISTANCE” AND SOMETIMES “GROWTH TRAGEDY”

This paper provides empirical evidence that there is no convergence between the GDP per‐capita of the developing countries since 1950. Relying upon recent econometric methodologies (non‐stationary long‐memory models, wavelet models and time‐varying factor representation models), we show that the transition paths to long‐run growth (the catch‐up dynamics) are very persistent over time and non‐stationary, thereby yielding a variety of potential steady states (conditional convergence). Our findings do not support the idea according to which the developing countries share a common factor (such as technology) that eliminates per‐capita output divergence in the very long run. Instead, we conclude that growth is an idiosyncratic phenomenon that yields different forms of transitional economic performance: growth tragedy (some countries with an initial low level of per‐capita income diverge from the richest ones), growth resistance (with many countries experiencing a low speed of growth convergence), and rapid convergence.     

Migration and regional convergence in the European Union

We offer an empirical, econometric analysis of the impact of migration on the EU27’s NUTS2 regions in the period 2000–2007. We find that migration had no significant impact on regional unemployment in the EU, but affected both GDP per capita and productivity. A 1 percentage point increase in immigration to immigration regions increased GDP per capita by about 0.02?% and productivity by about 0.03?% on impact and by 0.44?% for GDP per capita and 0.20?% for productivity in the long run. For emigration regions an increase in the emigration rate leads to similar reductions of GDP per capita and productivity both on impact and in the long run. Since immigration regions are often regions with above average GDP, while emigration regions in Europe practically all have below average GDP, migration does not seem to promote convergence.     

中国地区经济增长与能源消费强度差异分析

本文假设我国西部与东部地区的能源消费强度差异是西部与东部地区人均GDP差异的函数,然后同其他回归变量一起检验这两个变量之间的关系,并通过使用面板数据计量经济学模型进行实证估计。本文的研究结论为:第一,总体而言,西部与东部地区的人均GDP差异存在收敛,随着人均GDP的收敛,西部与东部地区的能源消费强度差异也是收敛的,但收敛的速度慢于人均GDP的收敛速度。第二,不同西部省份在经济增长过程中的能源使用效率是收敛还是发散存在差异。本文的政策含义是:政府在制定区域经济发展战略时,要鼓励和引导各地区充分利用能源禀赋以及能源利用效率方面的差异进行合作,走能源节约型的可持续的区域平衡增长道路。     

Regional convergence clubs in Europe: Identification and conditioning factors

The aim of this paper is to empirically identify convergence clubs in per capita incomes of European regions and to investigate whether initial conditions − as suggested by the club convergence hypothesis − are responsible for club formation. To tackle this issue, we propose a two-step procedure in which we first endogenously identify groups of regions that converge to the same steady state level, and in a second step we investigate the role of starting conditions and structural characteristics for a region's club membership. Our sample comprises 206 European NUTS2 regions between 1990 and 2002. The results strongly support the existence of convergence clubs, indicating that European regions form six separate groups converging to their own steady state paths. Moreover, estimates from an ordered logit model reveal that the level of initial conditions such as human capital and per capita income plays a crucial role in determining the formation of convergence clubs among European regions.     

The effects of integration on regional disparities: Convergence, divergence or both?

This paper offers an explanation for the coexistence of convergence across countries and the lack thereof at the regional level in the European Union. The model shows that, even if it accelerates growth and brings convergence across countries, the intensification of international knowledge spillovers due to more cross-country interaction may exacerbate within-country regional disparities, if regions with different specialization do not benefit evenly from the exchange of knowledge. The empirical evidence supports the implications of the model. In particular, the data show that regions specialized in advanced sectors at the beginning of the sample period became more similar in terms of per capita income, while regions specialized in traditional sectors lagged.     

The impact of the credit crisis on poor developing countries: Growth,worker remittances,accumulation and migration

We show that the credit crisis of OECD countries has a negative impact on the growth of the world economy according to an error-correction model including China and Australia. This causes negative growth effects in poor developing countries. The reduced growth has a direct or indirect impact on the convergence issue, aid, remittances, labour force growth, investment and savings, net foreign debt, migration, tax revenues, public expenditure on education and literacy. We estimate dynamic equations of all these variables using dynamic panel data methods for a panel of countries with per capita income below $1200 (2000). The estimated equations are then integrated to a dynamic system of thirteen equations for thirteen variables that allows for highly non-linear baseline simulations for these open economies. Then we analyze the effects of transitional shocks as predicted by the international organizations for the OECD and world growth for 2008 and 2009. Whereas growth rates return to the baseline scenario until 2013 with overshooting for China and Australia, the level of the GDP per capita shows permanent effects, which are positive only for China. In the poor countries, investment, remittances, savings, tax revenues, public expenditure on education, all as a share of GDP as well as literacy and the GDP per capita, are reduced compared to the baseline until 2087 where our analysis ends. Investment, emigration and labour force growth start returning to baseline values between 2013 and 2017. GDP per capita and tax revenues start returning to baseline around 2040. Education variables do not return to baseline without additional effort.     

Social capital, innovation and growth: Evidence from Europe

This paper investigates the interplay between social capital, innovation and per capita income growth in the European Union. We model and identify innovation as an important mechanism that transforms social capital into higher income levels. In an empirical investigation of 102 European regions in the period 1990-2002, we show that higher innovation performance is conducive to per capita income growth and that social capital affects this growth indirectly by fostering innovation. Our estimates suggest that there is no direct role for social capital to foster per capita income growth in our sample of European Union countries.     

Are living standards converging?

We re-address the convergence issue that is so prominent in the economic growth literature and present evidence as to what extent there is convergence across measures of living standards, alternative to capita income. The four additional indicators that we use are daily calorie supply, daily protein supply, infant mortality rates, and life expectancy at birth. We present results obtained using three techniques previously considered in growth empirics. These are cross-country regressions, distributional dynamics, and cluster analysis. Our main finding is that convergence in real GDP per capita does not imply convergence in other social indicators. However, the qualitative results for all indicators are the same in the sense that the persistent gap between the rich and poor does not only manifest itself in real GDP per capita but also in living standards.     

中国地区居民生活水平比较——基于全球夜间灯光数据

当衡量一国或地区居民生活水平时,统计学上一般有收入和消费两种视角。本文利用城乡住户调查中的人均可支配收入和国民经济核算中的居民消费水平,以全球夜间灯光数据为参照,综合收入端与消费端信息,对1997—2016年中国31个地区的真实生活水平进行比较分析。研究证实,灯光亮度与消费水平和人均可支配收入之间均存在显著的线性关系,可以用来估算真实生活水平。根据不同模型的回归结果得到,真实生活水平的最优无偏估计中消费水平的权重范围为（2795%,3831%）,人均可支配收入水平的权重范围为（6169%,7205%）。相对于消费水平,人均可支配收入更能准确地反映真实生活水平。本文进一步分析发现,样本期内居民生活水平增速小于人均GDP增速,可见经济的发展并未完全转化为生活水平的提高。中西部地区与东部地区的生活水平仍然存在巨大差距,东部地区的平均生活水平分别是中部和西部地区的17倍和21倍。     

Segmented stochastic convergence across the G-7 countries

This paper analyzes the stochastic convergence in per capita income levels among the current G-7 over the period 1900–89. We show that, in the presence of possible structural breaks, the strong condition of stationary pair-wise differences between per capita GDP holds in more cases than previously supposed. However, convergence occurs more frequently in the first part of the time sample than in the second one. First version received: June 1999 / Final version accepted: Feb. 2000     

Beyond GDP: an analysis of the socio-economic diversity of European regions

ABSTRACT

This paper aims to analyze the socioeconomic diversity of the European Union (EU-28) regions from a dynamic perspective. For that purpose, we combine a series of exploratory space-time analysis approaches to multiple Factor Analysis (MFA) applied to a large range of indicators collected at the NUTS-2 level for the period 2000–2015 for the EU-28. First, we find that the first factor of MFA, interpreted as economic development (ECO-DEV), is spatially clustered and that a moderate convergence process is at work between European regions from 2000 to 2015. Second, when comparing these results with those obtained for Gross Domestic Product (GDP) per capita, we show that the convergence pattern detected with GDP per capita is more pronounced: ECO-DEV adjusts slower over time compared to GDP per capita. Third, pictures provided by the remaining interesting factors, capturing educational attainment, population dynamics and employment, are very different.     

Income distribution dynamics across European regions: Re-examining the role of space

This paper is aimed at exploring the role played by space on the dynamics of regional per capita income disparities in Europe between 1980 and 2005. To do that, an analysis based on the so-called distribution dynamics approach is used as benchmark. Therefore, the external shape of the per capita income distribution and movements within it are examined using both continuous and discrete techniques. This first approach reveals that regional disparities across European regions have decreased over time and, based on the computation of a mobility index, also highlights the existence of a medium mobility degree within the distribution. Subsequently, a spatially conditioned distribution dynamics approach is developed to adequately assess the spatial dimension of the convergence process. In this new approach per capita income of each region is doubly conditioned on its per capita income and the per capita income of its neighbours, both in a previous period. Additionally, a novel mobility index on the basis of a spatial Markov chains approach is devised. The results illustrate the importance of geography in explaining regional per capita income evolution; in particular it is shown that poor regions surrounded by rich regions have a much higher probability of escaping the poverty trap than other poor regions.     

Inter-Region Transportation Costs,Regional Economic Growth,and Disparities in China

To examine the correlation between regional economic growth and inter-region transportation costs in China, this study establishes a regional economic growth model embedded with inter-region transportation costs based on the Cobb-Douglas production function. Based on a balanced growth empirical model, this study verifies the correlation by conducting a regression analysis of the panel data of 29 provinces, municipalities, and autonomous regions from 1985 to 2015. The empirical results show that: (1) The per capita GDP growth among the three regions (namely, the eastern, central, and western regions of China) meets a conditional convergence trend, and the decreasing of the inter-region transportation costs increases the convergence speed; (2) The per capita GDP growth is in line with the club convergence trend within each of the three regions; (3) The trend of the output elasticity of the inter-region transportation costs shows that the gradual decrease of inter-region transportation costs has a positive correlation with the narrowing of economic disparity after the year 2000, accelerating "common prosperity" across different regions in China.     

Multimodality in the distribution of GDP and the absolute convergence hypothesis

This article shows that, contrary to common wisdom, the insurgence of a multiplicity of clusters in the distribution of income is not necessarily against the hypothesis of absolute convergence. Using data for the world economies, the US states, the EU regions, and the Italian regions, we find that despite the distribution of income per capita for both the world economies and for the Italian regions is multimodal, only in the former case absolute convergence can be rejected. Similarly, although the distributions for the EU regions and the US states are both unimodal, convergence is unambiguously taking place in the latter case only. We show that these results are consistent with the neoclassical model of growth in the presence of non-convexities in production. We conclude that polarization in the distribution of per capita incomes is neither a sufficient nor a necessary condition to reject the absolute convergence hypothesis.     

Convergence clustering in the Chinese provinces: New evidence from several macroeconomic indicators

In this paper, the convergence clustering in 31 Chinese provinces regarding several important economic indicators over the period 1952 to 2016 was empirically investigated. Several provincial clusters were identified in the per capita (real) gross domestic product (GDP), consumption–income ratio, retail price, and consumer price inflation rates, using a club convergence and clustering procedure. The empirical findings are as follows. First, it was found that all series of the original data contain a significant nonlinear component. Second, it was observed that there are five significant clusters for the per capita income in China. Third, it was found that there are four significant clusters for the consumption–income ratio. Fourth, it was observed that there are four significant clusters for the retail inflation rates and two significant clusters for the consumer inflation rates in China. These results will enable local and central planners to implement economic growth, savings and price adjustment policies for different groups of provinces.     

Cross-country output convergence and growth: Evidence from varying coefficient nonparametric method

This article uses a nonparametric varying coefficient panel data model to study the convergence of real GDP per capita among 120 world economies for the sample period of 1980–2010. The estimates show that the indirect contribution of initial income via the control variables is important. The mediating effect of control variables to affect growth is positive. The conditional speed of convergence is larger than the absolute counterpart at all levels of initial income. The convergence hypothesis does not hold for economies with extremely low level of development. The conclusion is robust for regional subsamples of Europe, Asia, Latin America and Africa.     

Worker remittances,migration, accumulation and growth in poor developing countries: Survey and analysis of direct and indirect effects

A broad but brief survey of the literature on remittances and growth shows that indirect effects are only included via interaction terms. Then, we regress data for migration, worker remittances, savings, investment, tax revenues, public expenditure on education, interest rates, literacy, labor force growth, development aid and GDP per capita growth on migration, remittances and other variables for a panel of countries with income below $1200. The estimated dynamic equations are integrated to a system used for baseline simulations. Comparison with the counterfactual policy simulations ‘only 50% remittances’ or ‘no net migration anymore’ shows that the total effect of remittances on levels and growth rates of GDP per capita, investment and literacy are positive, and that of net migration is negative for literacy and investment but positive for growth.     

Real Convergence and European Integration: The Experience of the Less Developed EU Members

This study aims at providing an assessment about real convergence across countriesand regions in the EU, focusing more specifically on the four cohesion EU members.The results show that in the course of the last few years a process of convergence hastaken place between the per capita income levels of the EU regions and also, to a largerextent, of the Member States. Nevertheless, advances in real convergence are largelydetermined by the growth strategy implemented by the countries themselves. Lastly,our study suggests that the Community's regional policy has played a significant rolein favor of real convergence between the Member States of the EU. One importantlesson to be drawn is that the accession is likely to contribute significantly to improvingthe possibilities of the current Central and East European countries (CEECs) candidatesin aligning their per capita income levels with those of the EU members.     

International Comparisons of Living Standards by Equivalent Incomes*

We propose a measure of living standards for international comparisons. Based on GDP per capita, the measure incorporates corrections for international flows of income, labor, risk of unemployment, healthy life expectancy, household demography and inequalities. The method for comparing populations that differ in some non‐income dimension consists of computing the equivalent variation of income that would make each population indifferent between its current situation and a reference situation with respect to the non‐income dimension. This is applied to 24 OECD countries. The obtained ranking of countries differs substantially from the GDP ranking.