Economic Convergence, Capital Accumulation, and Income Traps: Empirical Evidence

Cyn-Young Park () and Rogelio Mercado

Economic Papers from Trinity College Dublin, Economics Department

Abstract: This paper aims to examine the factors that increase the likelihood of economic transition to higher income status; that is, it tries to answer the question of why some economies move to a higher income country group while others do not. Using a quintile income distribution approach, we identify 62 economies that moved to a higher quintile income group from 1960 to the 2010s out of a sample of 182 economies. Our findings show that higher physical and human capital growth and oil revenues are significantly associated with a greater probability of transitioning to higher quintile income group, although their effects vary not only across income groups within a sample period but also across different periods. Our results indicate that economies that have attained substantial capital accumulation (either physical or human, or combination thereof) and/or are blessed with oil resources have avoided income traps and demonstrated a successful and often steady transition to higher income groups.

Keywords: economic convergence; capital accumulation; middle-income trap (search for similar items in EconPapers)
JEL-codes: O10 O11 O40 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2017-05
New Economics Papers: this item is included in nep-gro
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https://www.tcd.ie/Economics/TEP/2017/TEP1117.pdf

Related works:
Journal Article: Economic Convergence, Capital Accumulation, and Income Traps: Empirical Evidence (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:tcd:tcduee:tep1117

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