Convergence in economic growth and institutional quality: Does convergence of institutions matter to catch-up rich economies?

Muhammad Safdar and Ahmad Nawaz

Research in Economics, 2025, vol. 79, issue 3

Abstract: Convergence of economic growth among the global north and south countries has attracted a considerable attention of policymakers and researchers. However, the growth literature lacks the comprehensive empirical evidence on the convergence of institutional quality and its implications for growth convergence particularly in terms of countries’ heterogeneities. This study aims to empirically investigate three types of convergence hypotheses both in economic growth and institutional quality. Moreover, it is examined whether the convergence of institutional quality leads to growth convergence? The empirical analysis is based on sample of 120 countries for 1984–2015 period. The findings reveal striking evidence of disparities in speed of growth and institutional quality convergence. The speed of growth convergence is highest in East Asian, transition, and advanced economies; however, the speed of institutional quality convergence is lowest in these countries. Developing countries show the reverse pattern with highest institutional convergence and lowest growth convergence. Such decoupling empirical dynamics between growth and institutional quality convergence indicate the path dependence and lock-in patterns of developing countries. This study empirically shows that higher speed of institutional convergence alone is unable to foster the growth catch-up process.

Keywords: Beta convergence; Sigma convergence; Institutional quality; GDP growth (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:79:y:2025:i:3:s1090944325000523

DOI: 10.1016/j.rie.2025.101079

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