Convergence Hypothesis and Economic Growth in ECO Countries: An Insight from MM-QR Approach

Muhammad Ramzan Sheikh, Iram Mushtaq, Asad Abbas and Sana Sultan
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Muhammad Ramzan Sheikh: Professor of Economics, School of Economics, Bahauddin Zakariya University Multan, Pakistan
Iram Mushtaq: MPhil Scholar, School of Economics, Bahauddin Zakariya University Multan, Pakistan
Asad Abbas: Lecturer in Economics, Department of Economics, COMSATS University Islamabad Vehari Campus, Pakistan
Sana Sultan: PhD Student, School of Economics, Bahauddin Zakariya University, Multan, Pakistan

Bulletin of Business and Economics (BBE), 2024, vol. 13, issue 1, 89-104

Abstract: This study assesses the convergence hypothesis and economic growth in ECO countries spanning from 1990 to 2021. Employing the MM-QR technique, it investigates the relationship between various factors and GDP growth. The study incorporates gross fixed capital formation, life expectancy, the effective rate of depreciation, secondary school enrollment, and the initial logarithm of GDP per capita as independent variables, with GDP growth as the dependent variable. Two distinct measures are employed: absolute convergence and relative convergence. Absolute convergence analysis reveals a positive and statistically significant trend. It indicates that poorer nations are experiencing higher growth rates compared to their wealthier counterparts. Moreover, the study investigates sigma convergence, explaining that the standard deviation of per capita income during the first and second decades signifies the existence of sigma convergence. However, during the third decade, although sigma convergence persists, it lies between the levels observed in the first and second decades. The study points out the significance of implementing pertinent policies to bolster GDP growth. It emphasizes the need for targeted strategies aimed at fostering economic development within the ECO countries.

Keywords: GDP growth; Gross fixed capital formation; Secondary school enrollment; Life expectancy; Effective rate of deprecation (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:rfh:bbejor:v:13:y:2024:i:1:p:89-104

DOI: 10.61506/01.00213

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