Growth and Income Convergence: Do Worldwide Economic Groups Make Any Difference?

Abstract

The aim of this paper is to study the income convergence process according to economic growth in the world. In addition of the income countries analysis, the paper introduce a deeper analytical framework involving groups of countries in the word. The study concerns 135 countries using data covering the period from 1980 to 2013. The methodological framework develop a cross-country analysis in the world, which integrate a decomposition approach for unconditional β-convergence, σ-convergence and conditional β-convergence of economic growth and income dynamics. Furthermore, based on the generalized Gini coefficient, the decomposition framework split the change in income inequality into progressivity/pro-poor growth and re-ranking components. The results are consistent with earlier studies that have examined inequality across countries. The main findings underline - even if cross-sectional and longitudinal analysis of the income distribution provide different complementary pictures over time - that except for few countries, all the results show a very weak evidence of β-convergence, σ-convergence and conditional β-convergence in the world, and that there is still a lot of work to do in order to reach some accepted levels of convergence as far as the income disparities and economic growth are concerned. Furthermore, even in the case of groups of countries with common economic interests, the convergence process is even more complicated and very hard to achieve in the majority of cases if a relative homogeneity could not be ensured about the growth’s key indicators.