The Impact of Foreign Direct Investment on Income Convergence in China - A Spatial Panel Data Analysis

After taking into account the spatial dependence effects in the panel data consisting of all 31 provinces, direct-controlled municipalities, and autonomous regions in China between the years 1998 and 2017, it found significant spatial autocorrelation effects in both traditional absolute and conditional β income convergence models. At the national level, using the spatial econometric models (Spatial Error Model for absolute convergence and Spatial Durbin Model for conditional convergence), the analysis shows that in the past 19 years from 1999 to 2017, there is no absolute β income convergence. However, there is conditional β income convergence after controlling for all growth factors, while the positive effect of fixed asset investment on regional economic growth is significant, and the effect of population growth is significantly negative. The other growth factors such as FDI inflow, export, and higher education enrollment were surprisingly found no statistically significant effects on regional economic growth. From regional level (Spatial Durbin Model and Spatial Lag Model), there is no conditional β income convergence within each four economic regions. Nonetheless, the northeast region showed an income divergence trend, where only the fixed asset investment is positively significant. This study results imply that China should continue to improve fixed asset investment and control population growth to stimulate regional economic growth and income convergence.

Trade Patterns and International Technology Spillovers: Theory and Evidence from Japanese and European Patent Citations

International diffusion of knowledge is important to both the speed of the world’s technology frontier expansion and income convergence across countries. For example, Eaton and Kortum (1996) estimate innovation and technology diffusion among 19 Organization for Economic Co-operation and Development (OECD) countries to test predictions from a quality ladders model of endogenous growth with patenting.

The parallel convergence of income and educational achievements: joint distribution dynamics

Human capital is an important factor of economic growth. Previous studies show that convergence patterns of income and education differ on a regional level. The purpose of this article is to verify whether there is statistical relationship between the patterns of educational achievements convergence and income convergence processes in Poland on the regional and local level. The paper describes and applies an innovative way for the formal verification of similarities in convergence patterns on the basis of transition matrices and kernel density estimation. The analysis is performed on Polish data for educational achievements (lagged exam results of 15-year old pupils) and income per capita worker on the regional and local level for the period 2003–2015. Despite the occurrence of (weak) convergence for both phenomena, each has a different course. Therefore, the processes of the income convergence and educational achievements convergence in Poland were not parallel.

Economic convergence in a globalized world: The role of business cycle synchronization

Increasing economic integration and global synchronization can be key for countries aiming to catch up in GDP per capita terms. Little attention has hitherto been placed in synchronization as determinant of convergence. In this paper we estimate the effect of economic globalization and synchronization on income convergence for a sample of 89 developed and developing countries in the period 1970–2015. We use a dynamic factor model and panel data techniques to undertake the objectives of the paper. We show that synchronized countries (those correlated with the factor) exhibit a higher response on GDP per capita growth with variations on the global business cycle. This implies that synchronization improves growth for that group in global expansionary phases, but also implies risks during global recessions. On the contrary, the effect on growth of an economic globalization index is less relevant for synchronized countries than for asynchronized countries. The latter result implies that asynchronized countries can benefit more increasing their levels of economic globalization.

An Examination of Per Capita Income Convergence in Emerging Market Economies

The study intends to examine the convergence of per capita income in emerging market economies (EMEs) toward a steady state for the post reform period (1999–2019). Cross-sectional regression analysis has been performed for unconditional convergence and a panel data regression to find the conditional convergence in EMEs. Sigma convergence has been applied to find the dispersion of income level in EMEs. In addition, to find the impact of global financial crisis on the convergence process of EMEs, unit root test with one structural break has been applied. The findings indicate that there exists unconditional convergence among EMEs toward a common steady state. Further, the results show a significant role of all control variables except education in the growth process but prove the absence of conditional convergence in selected EMEs. The results of sigma convergence find that the dispersion of per capita income is declining in EMEs, showing the sign of sigma convergence in EMEs. However, this study provides further scope to examine per capita income convergence among EMEs by including other variables and their effect on the convergence process of EMEs.