Cross-country convergence: to be or not to be, that is the question

Sakari Lähdemäki

Empirical Economics, 2024, vol. 67, issue 2, No 15, 839-875

Abstract: Abstract Can we associate globalization with converging productivity levels of different countries? Are developing countries catching up? This paper provides answers to these questions by studying the convergence of labor productivity with the Penn World Table 10.0. I utilize standard $$\beta $$ β - and $$\sigma $$ σ -tests and the new $$\sigma $$ σ -test Kong et al. (J Econom 209(2):185–207, 2019) propose. Furthermore, I propose using a time-series trend test to further study the underlying process of $$\sigma $$ σ -convergence. The tests support convergence in the country groups of OECD, EU, APEC, Europe, and Asia. Contrary to the current belief that the income gap between rich and poor countries is not closing, I find $$\sigma $$ σ -convergence in a group that excludes only African countries. More so, even the group of all countries seems to converge from the year 2000.

Keywords: Convergence; Globalization; Labor productivity; Convergence clubs (search for similar items in EconPapers)
JEL-codes: O40 O47 O52 O53 O54 O55 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s00181-024-02561-8

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