Beta Convergence among Former Socialist Countries (original) (raw)
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Beta Convergence Analysis on Transition Economies: 1991-2011
International Conference on Eurasian Economies 2014, 2014
Owing to Solow's neo-classical the convergence hypothesis, which explains underdeveloped and developing countries grew faster than any of these developed countries have acknowledged that captures the level of per capita income, was added to the economic growth and development literature. Despite, theoretically there are two different approaches in convergence analysis; real and conditional, it cannot be said generalizing empirical results for both. Accordingly, 29 transition economies which tried to cross from the planned economic system into liberal economic system, is subjected to this study. Convergence have been analysed on transition economies between 1991 and 2011 using the growth rate of per capita income as variables by cross-sectional data analysis. In this study, additionally to real convergence, obtaining from the KOF index of economics, political and social integration and openness data were included the model as dummy variables for examining conditional convergence. Depending on empirical results on real and conditional convergence analysis, the convergence hypothesis is accepted. It is identified that Cambodia, Vietnam and China especially have caught up with faster growth comparing with other transition economies; however, those countries have shown weaker convergence than others. On the other hand, Kirghizstan and Tajikistan, which are known as mostly having the effects of transition recessions, have negative growth rates, and those countries have been diverging from other countries' growth performance. From findings obtained within conditional convergence, it is examined while political liberalisation and openness variables have been accepted significantly; the economic and social liberalization variables have no significant effect on convergence.
Convergence in Transition CountriesFocus on Investment: Central and Eastern Europe, 19701996
Economics of planning, 2001
Our data on investment in Central and Eastern European economies reveal that, though investment rates were typically high in the 1970s, the marginal efficiency of investment was low. Investment shares begun to decline in the 1980s, before the collapse of the communist system, but there was some recovery in most countries after transition. We use the Kalman filter framework to test for convergence in investment rates. We find some evidence of convergence in Central European countries-former Czechoslovakia, Poland and the countries of the former Yugoslavia. For the remainder of the socialist bloc, however, we were unable to isolate convergence in investment shares.
Convergence in transition countries - focus on investment
2001
Our data on investment in Central and Eastern European economies reveal that, though investment rates were typically high in the 1970s, the marginal efficiency of investment was low. Investment shares begun to decline in the 1980s, before the collapse of the communist system, but there was some recovery in most countries after transition. We use the Kalman filter framework to test for convergence in investment rates. We find some evidence of convergence in Central European countries-former Czechoslovakia, Poland and the countries of the former Yugoslavia. For the remainder of the socialist bloc, however, we were unable to isolate convergence in investment shares.
Real Economic Convergence in Western Europe from 1995 to 2013
International Journal of Business & Economic Development, 2016
The aim of the paper is to analyze the economic convergence of real per capita GDP in the Western European countries with two types of measurement methodology. The first is sigma convergence, based on the coefficient of variation of real per capita GDP. The second is beta convergence, absolute/unconditional and conditional, including economic and socio-political variables, based on the neoclassical growth theory. The hypothesis of the paper is that there has been real economic convergence in Western Europe in at least one analyzed sub-period. The relationships between selected macroeconomic variables and the rate of economic growth are econometrically tested. Both sigma and beta convergence are estimated for the period 1995-2013 and four sub-periods: 1995-2003, 2004-2013, pre-crisis sub-period 2004-2008 and the crisis sub-period 2009-2013. The empirical findings support the hypothesis of economic convergence, i.e. that the poorer countries tend to grow faster than the rich ones in p...
Testing Convergence in Post-War Transition Country
International Journal of Business and Economics Research, 2021
The issue of economic convergence has been widely analyzed by the researchers. Convergence hypothesis has been tested at different levels-global, national, regional and local. This paper is analyzing local economic convergence in Bosnia and Herzegovina (BiH) in last three decades. In this period the country was facing twofold transition: from war to peace and from socialism to market economy. The regression and distributional approach to convergence analysis are combined. The first hypothesis research is testing is that poor municipalities grow faster comparing to rich municipalities-unconditional beta convergence. Second hypothesis is that dispersion of local per capita GDP decreases over time-sigma convergence. To further investigate the issue and check the changes in the distribution, several visual inspection instruments were also used. The research findings are inconclusive. While regression analysis provides some evidence for unconditional beta-convergence, in a case of sigma convergence, results are mixed. This is related to significant structural changes country went through, firmly confirmed with the transitional probability matrix data. Findings confirm the necessity for combining different approaches and instruments while analysing convergence. From the specific country perspective, research results can be used as a strong argument for the necessity of new more balanced regional development policy.
Testing for Ongoing Convergence in Transition Economies, 1970 to 1998
Journal of Comparative Economics
In this paper, the authors use a time-varying parameters procedure to test for a common growth path in the ex-Communist bloc, both pre-and postreform. They test whether there has been convergence within the bloc or between the bloc as a group and the West. Surprisingly, there is little evidence of convergence within the bloc, which brings into question the effectiveness of policies to reduce differentials in income per capita under the Communists. There is also little evidence of convergence with respect to the West, either during the period from 1970 to 1990 or if the reform years are included (i.e.
Economic Growth and Income Convergence in Transition: Evidence from
2013
The paper examines the evolution of income per capita for a sample of high-income transition countries in the period 1991-2007. The analysis focuses on the dynamics of income per capita convergence throughout the period. We review patterns of income dispersion in Central Europe in a historical perspective and examine the dynamics of convergence over time. We present the model of beta and sigma convergence in augmented Solow model with human capital accumulation. Our evidence suggests that high-income transition countries experienced a period of robust convergence as the income per capita differential, relative to the U.S level, diminished substantially over time. The increase in the stock of human capital contributed substantially to the speed of real convergence.
In this paper, we use the concept of convergence based on the stationarity of cross-country per capita output differences and propose new on the persistence and change of persistence of data, taking into consideration the occurrence of structural changes. We consider data on per capita output of the European Union member states, considering the Western European economies and the Eastern European economies in a total of 23 countries. Our objective is to analyze the convergence process of these economies and, in particular to conclude whether there has been a convergence and/or divergent process between the Western European economies and between those economies and the Eastern European economies over the sample period. By considering different sub-periods, the results suggest that in general the Western European countries have reduced their per capita output gaps, being Ireland the only country reporting divergence until the end of the 80s. Bulgaria, Hungary, Poland and Romania have r...
Determinants of real convergence in Central and Eastern Europe
2016
This paper deals with the process of convergence of the Central and Eastern European (CEE) countries towards the EU and attempts to identify the main driving factors behind this process. In these regards, we first provide an overview of the real convergence through an analysis of several economic variables – rate of approximation of real GDP per capita and price levels, trade integration, harmonization of the economic structure and achievements in the labor market. In addition, we offer a formal econometric evidence on the main determinants of the convergence process, based on a panel data for 10 CEE countries during 2000-2015 period, estimated with fixed effects. The results of our study imply that higher savings and investment ratio, higher labour productivity, more efficient labour markets (lower unemployment) and macroeconomic stability (lower inflation and lower budget deficits) are conducive to real convergence. However, quite surprisingly, we find that the close trade integra...
Macroeconomic convergence in the SADC: Evidence on beta and sigma convergence
This paper examined the prospects for the SADC regional integration by assessing the convergence of real per capita GDP given structural differences across the countries (Conditional beta convergence), and the possibility of reductions in income dispersions across the SADC member states (Sigma convergence). The study also analyzed the real GDP growth. The study finds convergence in the level and growth of real per capita GDP and GDP, based on fixed effects, maximum likelihood estimations, and Cointegration analysis.