An Analysis of Income Convergence across Asian Countries

Kalsoom Zulfiqar and Qurat-ul-Ain

Abstract

The development process in Asia over past few decades has given rise to widespread income disparities. Present study is conducted to examine the income convergence process for a set of 40 Asian countries for the time period 1980 to 2016.The study has utilized pooled least square methodology with time dummies and cross section weights standard errors (PCSE). Empirical results support the presence of conditional convergence in Asian region which is further established by including population growth, inflation rate, unemployment rate, exports growth and openness as control variables. Disparity level (distance from average steady state) for each Asian country is also assessed by using demeaned values to understand the relative position of each country. Furthermore, the study provides estimates of average speed of convergence (how many years to reach steady state) for each country as well.