Traditional convergence tests with Penn World Table 9.0

Working Papers 309 Sakari Lähdemäki

Can we associate globalisation with converging productivity levels of different countries? Are the developing countries catching up? Which specific country groups converge? This paper provides answers to these questions by studying unconditional beta-convergence and sigma-convergence of labour productivity with the Penn World Table 9.0 dataset. Unconditional β-convergence exists if a smaller initial level of an economic measure is related with a larger growth rate of this measure, whereas unconditional σ-convergence exists if the standard deviation of the levels of an economic measure decreases over time. This paper tests the existence of convergence within specific country groups, which are the international organisations OECD, EU and APEC, and the continents Africa, Asia, Europe and South America. The tests support unconditional beta-convergence and sigma-convergence in the country groups of OECD, EU, APEC, Europe and Asia, whereas the convergence in Africa and South America is uncertain or non-existing.

Keywords: Unconditional convergence, beta-convergence, sigma-convergence, globalisation, labour productivity, OECD, EU, APEC, Europe, Africa, Asia, South America
Published: January 3, 2017
JEL: O40, O47, O52, O53, O54, O55
ISBN: 978-952-209-154-3 (pdf)
ISSN: 1795-1801 (pdf)
Publication (PDF)