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The dynamics of convergence, disparity, mobility, and persistence of output gaps across economies: A pairwise comparative study

Kumari, Archana

The dynamics of convergence, disparity, mobility, and persistence of output gaps across economies: A pairwise comparative study Thumbnail


Authors

Archana Kumari



Abstract

The on-going impacts of the COVID-19 pandemic has reiterated the existence of regional inequalities across the World. The United Nations (UN) underlines the importance of reducing inequalities and ensuring equal opportunities for everyone and for the achievement of the Sustainable Development Goals (SDG). Countries across the world are striving to attain sustainable growth to promote economic, social, and territorial cohesion. Regional income inequalities have been widely studied, and at the same time, a highly debated topic. The drive to reduce regional differences emphasises the need to stimulate regional convergence of income between regions. In this regard, economic convergence becomes an important principle behind regional cohesion policies across the globe because the convergence hypothesis highlights the need for faster growth of relatively poor regions to catch-up with the richer ones. The proposition of convergence has been constantly evolving based on factors such as the development of new conceptual underpinnings, development of methodological techniques to measure convergence, and availability of data. Consequently, the topic of regional convergence draws the interest of researchers from across the world. The thesis aims to examine the evolution of output convergence across countries and regions.
The ability to identify a dominant convergence trend in relation to key economic output variable (such as regional income) has been discussed in the existing literature. We cannot understand the effectiveness of regional economic development policy (or indeed any regional policy tackling regional inequality) without being able to set out a conclusive output convergence trend. Convergence trends critically depend on factors such as the convergence indicators used, period under study, heterogeneous mix of regions, geographical levels, and statistical techniques employed. Research in this domain use these factors differently and hence yield inconsistent findings. Additionally, how individual regional economies change ranking within a distribution (mobility and persistence behaviour) can lead to erroneous inferences on aggregate convergence trends. Researchers have highlighted the significance of measurement of regional mobility to gain insights into the intricacies of economic disparities, however, they also underline a lack of techniques to quantify mobility. Therefore, another contribution of this study is to provide detailed insights on the mobility behaviour of regions.
The thesis employs a pairwise technique proposed by Webber and White (2003, 2009) (known as X-convergence) which can simultaneously assess the important dynamics of convergence, divergence, mobility, and persistence. A comprehensive analysis of pairs of regions seems promising to unfold nuances of regional disparities. The patterns of convergence are identified and compared with the help of traditional measures of convergence (beta, sigma, and gamma convergence) and the X-convergence measure to validate its advantages and show that the employment of different techniques yield mixed findings. The assessment is conducted within three geographical locations—China, the US and the EU—and at the national levels over the last two decades. These locations are selected because they provide evidence of mixed dynamic behaviours. The effect of the 2008 global recession on the convergence trend is also assessed to get a clear picture of its impact on regional disparities.
The findings suggest high instances of divergence within China and the US before the 2008 global recession. For the EU, convergence is prominent at the national level but there are variations at the subnational levels. The effect of the 2008 global crisis on the convergence trend varied across different geographical locations. Findings on mobility dynamics of regions suggest persistence in groups of high and low-income regions suggesting the rich are still rich and poor are still poor.
The findings provide crucial information for evidence-based and place-based policy initiatives. The study assists policymakers to strike a balance between growth and equality. The findings of stagnating/slowing high-income regions, particularly after the global crisis, indicate that there should be a multi-pronged approach to help both low-income and high-income regions. The heterogeneous nature of regional inequality at the national and subnational levels suggest the need for a multi-pronged approach based on priorities and capabilities.

Citation

Kumari, A. The dynamics of convergence, disparity, mobility, and persistence of output gaps across economies: A pairwise comparative study. (Thesis). University of the West of England. Retrieved from https://uwe-repository.worktribe.com/output/6822818

Thesis Type Thesis
Deposit Date Oct 30, 2020
Publicly Available Date Mar 29, 2024
Keywords Convergence; Divergence; Regional Disparity; Mobility; Persistence;
Public URL https://uwe-repository.worktribe.com/output/6822818
Award Date Oct 26, 2021

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