Economic Convergence in the African Continent: Closing the Gap

The paper attempts to analyse the conditional β‐convergence and its sources for 32 African countries over the period 1960‐2008. The augmented Solow model with both gross domestic product (GDP) per worker and per capita income is estimated using the dynamic system generalized methods of moments (GMM) technique with the panel data. This is the first study on the sources of conditional β‐convergence for African countries. According to the results of the augmented Solow model, income convergence rates are lower than those of GDP per worker. Moreover, total factor productivity convergence, human capital convergence and capital labour convergence are contributing towards the convergence of GDP per worker in Africa. This means that growth in the poorest African countries is being augmented by “catch‐up factor,” which is good news for them. However, convergence in terms of GDP per worker is not being fully translated into income per capita convergence. The demographic structure in the African continent with its record of persistent population growth has played an important role in lowering the income convergence of its countries.     

中国各地区城乡收入收敛性实证研究

使用1991-2011年的人均收入和CPI数据,对中国东、中、西、东北部地区进行了β和σ收敛分析,实证表明:东部地区城镇、农村人均收入在1991-2011年不存在σ收敛、β收敛,即东部地区城镇、农村人均收入差距都在不断扩大;中部地区城镇、农村人均收入在1991-2011年均存在σ收敛、β收敛,且城镇人均收入每年以17.333%的速度收敛,农村人均收入每年以8.333%的速度收敛;东北地区城镇人均收入差距在不断扩大,而东北地区的农村收入每年以3.378%的速度收敛;西部地区城镇人均收入差距在缩小,每年以8.174%的速度趋于一致,而农村人均收入差距在不断扩大;中部地区人均收入在城镇、农村上收敛速度均为最大。     

African Development: Beyond Income Convergence

In examining some big questions on African development, I provide evidence that the dynamics of some development indicators could support both endogenous and neoclassical growth theories in the convergence debate. This paper investigates convergence in real per capita gross domestic product and inequality‐adjusted human development in 38 African countries, disaggregated into 10 homogenous panels based on regions (Sub‐Saharan and North Africa), income levels (low, middle, lower middle and upper middle), legal origins (English common law and French civil law) and religious dominations (Christianity and Islam). The main finding is that the income component of the Human Development Index moves slower than others in the convergence process, and thus requires a more focused policy intervention. As a policy implication, looking beyond income convergence can provide a concrete agenda for development involving all aspects of economic, institutional and social life.     

Growth convergence reconsidered

Growth Rate Convergence Reconsidered. —While convergence properties lie at the heart of the endogenous-exogenous growth debate, the empirical literature on convergence to date remains ambiguous. Results appear to be particularly sensitive to the choice of income per capita or labor productivity as dependent variable. The paper shows that the dependence reflects a measurement error arising from the interdependence of human capital accumulation, labor force participation rates and development levels. Estimation of a corrected convergence equation yields results generally supporting convergence except in the manufacturing sector.     

中国省域间居民收入水平收敛性实证检验

利用2000-2008年我国31个省级区域人均收入面板数据,应用多种面板单位根检验方法和不同比较基准对全国及东、中、西三大区域的城镇及农村居民人均收入是否存在收敛性进行实证检验。结果发现,以北京人均收入为基准,不管是全国还是三大区域,不管是城镇还是农村,都只存在条件收敛,不存在绝对收敛。而以全国人均收入为基准,在全国层面城镇和农村都既存在绝对收敛,也存在条件收敛。以组内平均水平为基准时,三个区域的城镇都存在对本组内平均水平的绝对收敛,农村情况基本相反,三个区域都不存在绝对收敛。东部和西部存在条件收敛,而中部不存在条件收敛。     

新疆人均收入和收入不平等的增长与收敛——基于空间面板模型

新古典经济增长模型预测,随着时间的推移,人均收入的差距将会缩小,收入不平等将会逐渐趋同。本文利用1995年—2012年新疆15个地州的空间面板数据,采用跨部门模型和空间面板数据模型,并考虑空间交互效应来检验上述预测对新疆的正确性。研究结果显示,在对教育程度、失业、产业构成、人均收入的空间滞后增长以及区域固定效应进行调控之后,人均收入存在条件收敛,而收入不平等则存在无条件收敛。     

Population dynamics and economic growth in China

This paper focuses on two major elements of China's population dynamics—the rising proportion of workers in the population and the shift of rural workers from agriculture into industry and services—in a provincial-level analysis of per capita income and productivity growth during the last three decades. We measure the ‘mechanical’ contributions of these dynamics to per capita income as revealed by growth decompositions, before assessing the determinants of per capita income and productivity growth in a series of regressions that include the growth of the working-age to total population (WAP) ratio and a measure of sectoral employment change. Our results indicate that sectoral change has made a significant positive contribution to both per capita income growth and aggregate productivity growth, stemming from its positive impact on agricultural productivity growth—as predicted by the Lewisian dual economy model. However, the negative impact of sectoral change on productivity growth in the industrial and service sectors, combined with the negative impact of growth of the WAP ratio on both per capita income and aggregate productivity growth, suggests that the benefits of China's population dynamics during the last three decades have been overstated.     

Productivity, innovation and ICT in Old and New Europe

This paper investigates the productivity performance of CEE countries vis-à-vis the EU-15 during the 1990s to detect sources of convergence between the two regions. The paper shows that changes in labour intensity have been an important source of productivity convergence during the 1990s, and are likely to remain so in the near future. It is also found that despite lower income levels, ICT capital in the CEE-10 has contributed as much to labour productivity growth as in the EU-15. Industry analysis shows that manufacturing industries that have invested heavily in ICT have been key to the restructuring process. As such ICT may therefore have been an important source of growth but probably temporary source of convergence. In the longer run the impact of ICT on growth will have to come primarily from its productive use in services. The paper therefore includes a New Economy Indicator that reflects the existence of conducive environment for continued ICT investment and diffusion. It shows that further reforms are much needed for CEE countries to enter a second convergence phase in the coming decades.This paper is written as part of a project on Information & Communication Technologies as Drivers of Economic Development in Post-Communist Countries sponsored by USAid (Grant No. 220/001.6). The industry data for the EU-15 (section 4) are updated estimates derived from a study sponsored by DG Enterprise of the European Union (OMahony and van Ark 2003). We are grateful to Robert Inklaar and Edwin Stuivenwold for statistical assistance, and to various commentators on this paper at seminars and workshops. We benefited in particular from comments by Bart Los and Marcel Timmer. The authors are solely responsible for the results presented and any remaining omissions.     

New evidence on the role of regional clusters and convergence in China (1952–2008)

A new panel method is applied to the case of Chinese provinces to analyze the existence of club convergence in terms of per capita income, labor productivity, and capital intensity, from 1952 to 2008. The advantage of this approach is that it takes into account the heterogeneity of Chinese regions in a nonlinear time-varying framework, where more attention is paid to the spatial dimension. This time-varying approach outperforms other methods used in the relevant literature for an economy in transition, such as China, that has undergone a significant transformation over the period under consideration. Our results indicate that Chinese regions have converged into clubs. However, it is observed that Heilongjiang is diverging in terms of labor productivity and capital intensity, while Liaoning and Guizhou display similar patterns in terms of labor productivity, and Shanxi and Hebei in terms of capital intensity. These results indicate that specific economic packages need to be implemented in the clusters that were identified, with special attention to those regions that show a divergence behavior, in order to guarantee the sustainability and equality of regional growth.     

Does foreign direct investment promote regional development in developed countries? A Markov chain approach for US states

This paper investigates the effects of inward FDI on per capita income and growth of the US states since the mid-1970s. Using a Markov chain approach, it shows that both quantitative and qualitative characteristics of FDI affect per capita income and growth. The empirical findings suggest that employment-intensive FDI, concentrated in richer states, has been conducive to income growth, while capital-intensive FDI, concentrated in poorer states, has not. Consequently, FDI has tended to be associated with weaker rather than stronger income convergence among US states. It appears to be less important whether FDI has been undertaken in the manufacturing sector of US states or in other sectors.     

Challenges for the new EU member states on the road to the Eurozone

This paper analyses the process of nominal and real convergence in the new Member States of the European Union (NMS). The importance of nominal and real convergence is underlined in connection with a successful catching-up. The NMS economies experienced robust economic growth in recent years, which had a positive impact on the convergence process. Although this favourable development of real convergence is accompanied by a simultaneous price (nominal) convergence, the comparative price level is still biased towards lower level in comparison with the per capita income. The regression analysis shows interdependence between the comparative price and the income per capita level. This basis enables to evaluate potential benefits and risks connected with joining the euro. The benefits connected with elimination of exchange rate risks and reduction of transaction costs can be compared with the disadvantages associated with the loss of an independent monetary policy and an adjusting exchange rate mechanism. Attention is paid to a potential impact on nominal and real convergence of the observed countries. There are some risks for these countries connected with the common monetary policy, which is adjusted more to the conditions of stabilized advanced economies, forming the core of the Eurozone. These risks can be overcome on the basis of a fast labour productivity growth, accompanied by an adequate policy, ensuring the macroeconomic stability. The rapid productivity growth is raising the relative price level. The Maastricht dilemma, i.e. the fulfilment of two objectives during the stay in ERM II (the price stability and the exchange rate volatility) under on-going nominal convergence enforces an appropriate monetary and fiscal policy. However, such strict policies may slow down the economic growth. Another possible measure for keeping the price stability is a relaxation of the fluctuation band (its full exploitation to the upper and bottom limits), or a change of the central parity (revaluation).

江西省城市化水平时空变化及其经济影响因素分析

运用主因子分析方法确定了城市化综合水平评价模型,对江西省城市化综合水平进行时空分析,并采用灰色关联方法对其时空变化的主要经济驱动因素进行了揭示。研究表明:①江西省城市化综合水平的空间分布具有一定的规律,而其时间变动则体现出南北分异特征;②灰色关联揭示江西省城市化水平时空变化的经济驱动具有多源性,其中人均第二产业产值、在职职工平均工资、人均第一产业产值、人均第三产业产值、人均社会零售额、人均GDP,它们成为江西省城市化水平时空变动的最关键因素。因此,在未来该省城市化进程推进过程中,不仅要关注其工业化水平和城镇居民收入的提高,还应注意农业生产率的提高、第三产业(特别是商业)的充分发展。     

Population trends,employment levels,economic performance,and income evolution in East and West Germany since unification

Between 1989 and 1996, former East Germany experienced a population loss of more than 1 million inhabitants as hundreds of thousands of East Germans moved to former West Germany. Population growth in East Germany sank dramatically, since 1995, however, since 1995, this trend has been reversed and today more children are born than in the preceding year.The number of gainfully employed East Germans shrank between 1989 and 1993 by 3.5 million. Job loss hit female employees, who in East Germany prior to 1989 formed a part of the job force in proportion to their number, especially hard. In 1994 and 1995, employment increased in the East German states, but job growth did not extend into 1996 as economic growth, which sustained a process of “catching up” with West Germany, failed to maintain its dynamism.Economic performance disparity between East and West Germany is very large. Although productivity increased significantly in former East Germany, wage costs outran productivity growth. Per capita income in East Germany in 1991 was 49 percent of per capital income in West Germany and as of 1994 per capita income had reached 66 percent of its West German equivalent.     

THE THIRD NOEL BUTLIN LECTURE: AUSTRALIAN EXCEPTIONALISM REVISITED

In the late-nineteenth century, Australia had one of the highest levels of income per capita in the world. Over the twentieth century, Australia's exceptional position declined as its high labour force participation rate and male-skewed gender ratio gradually aligned with other countries. A similar reversion occurred in the other important components underlying Australia's high productivity, such as work hours. As the structure of the economy shifted away from a reliance on agricultural and towards manufacturing, Australia's protective attitude and restrictive business practices may have exacerbated its loss in productivity. Considerable research remains to be carried out to confirm these views.     

Future of Economic Growth for South Korea*

More than 80 percent of US growth between 1950 and 1993 can be attributed to transition dynamics (increases in R&D intensity and educational attainment), with less than 20 percent of growth deriving from population growth. Similarly, growth accounting shows that 80 percent of economic growth in Korea can be attributed to transition dynamics. However, the specific factors that have moved Korea far from its steady state are significantly different from the factors that have done so for the USA. In addition to the growth rates of the two countries, we also analyzed the (steady‐state) level of output per worker to determine where the Korean economy is headed relative to the USA. In 1960, Korea was characterized as poor (0.111) relative to its own steady state (0.765), and incomes were at 11.1 percent of those in the USA. Since then, however, Korea has been growing more rapidly than the USA. In our analysis, we also consider the extreme case where total factor productivity levels converge completely. Interestingly, in this case, the USA and Korea exhibit unconditional convergence similar to what is generally observed in the OECD. As the economy approaches the steady‐state income level, however, the growth rate of output per capita will decline.     

Government spending and the distribution of economic growth

In the United States, total government spending, and especially government social spending, has increased greatly over the last 50 years. What effect this has had on economic growth is a subject of intense debate among politicians, policymakers, and economists. However, there has been less attention paid to the distributional effects of government spending even though economic inequality has grown greatly over the last generation and much social spending is at least indirectly intended to reduce inequality. The effects of government social spending in the United States on growth in family income at deciles of the income distribution were estimated. The results suggested that social spending but not non‐social spending was likely to increase growth in family income per capita measured over 10‐year intervals. The largest effects of social spending were for deciles below the median income. At no point in the distribution does social spending have a negative effect.     

The Effects of Remittances on Output per Worker in Sub‐Saharan Africa: A Production Function Approach

This paper uses a production function to examine the channels through which remittances affect output per worker in 31 Sub‐Saharan African countries from 1980 to 2010. Lagged remittances increase physical capital per worker, average years of schooling and total factor productivity, but the effectiveness of remittances varies with the income level of the recipient nation. Although remittances have increased both physical capital and total factor productivity among the upper middle income nations, among the lower middle income, they have increased only the physical capital. Meanwhile a reduction in institutional risk has encouraged investment and efficiency, but its relationship to the effectiveness of remittances has been inconclusive.     

Fiscal flows in Europe: The redistributive effects of the EU budget

Fiscal Flows in Europe: The Redistributive Effects of the EU Budget. — In this paper we analyze the redistributive effects of the EU budget among European countries, exploring the relationship between income and fiscal flows, both in per capita terms. Using a new data set on EU budgets from 1986 to 1998, we find that the EU budget has a redistributive effect, though only on its expenditure side. The most redistributive expenditure category is the Regional Fund, followed by the Social Fund and by the guarantee section of the EAGGF. All of them have become increasingly redistributive in time. Total budgetary revenues show only proportionality with income. As regards the net financial balance, three groups of countries are identified, given the treatment they get from the EU budget that cannot be explained by their per capita income levels.     

Industrial Productivity Convergence in China

This paper examines the convergence process of industrial productivity between Chinese regions. Both σ- and β-convergences are investigated using a panel data set of 30 provinces and autonomous regions over the period 1985–1999. Unconditional σ- and β-convergence methods fail to detect productivity convergence over the whole sample period, although they suggest convergence during a sub-period 1985–1990. The estimates of a human capital enhanced production function, with the constant return to scale constraint, show that productivity gaps between Chinese regions declined during 1985–1999 with a rate of convergence of around 1.3% per annum. Similar results are also found when the data are disaggregated into three broader geographic regions.     

Why was Australia so rich?

Between 1870 and 1890 Australian incomes per capita were 40 percent or more above those in the United States. About half this gap is attributable to Australia’s higher labor input per capita, and half to its higher labor productivity. The higher labor input is due in part to favorable demographic attributes and partly to a favorable workforce participation rate. The higher productivity results from an advantageous natural resource endowment. By 1914 the income lead over the U.S. had all but disappeared due to declines in Australia’s advantages both in labor input per capita and in labor productivity.