Convergence among themselves and Middle-income trap of South-East Asian Nations: Findings from a New approach

Olaoluwa Yaya, Xuan Vinh Vo and Oluwasegun Adekoya ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the possibility of middle-income convergence among seven members of Southeast Asian nations (Indonesia, Laos, Malaysia, Myanmar, Philippines, Thailand, and Vietnam), with Malaysia being in upper-middle-income rank and other six countries in lower-middle-income rank. We apply unit root testing framework that allows for smooth nonlinearity, abrupt break, and cross-dependence in the income differences. Results show that these lower-middle-income countries are likely to converge among themselves, and also converge to the income level of Malaysia in the long run. Economic policies capable of stimulating long-run economic growth of these lower-middle-income countries is therefore recommended, and the countries should be ready to take up the challenge of upper-income country, like Malaysia.

Keywords: Southeast Asia region; Cross-sectional dependency; Fourier function; Income convergence; Seemingly unrelated regression (search for similar items in EconPapers)
JEL-codes: C19 C22 N17 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-isf and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:109372

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