Analysis of club convergence for economies: identification and testing using development indices

This paper attempts to identify club convergence using the procedure suggested by Phillips and Sul (Phillips and Sul, Econometrica 75:1771-1855, 2007, Phillips and Sul, J Appl Economet 24:1153-1185, 2009) based on GDP per capita for 102 countries across the globe for the time period 1996 through 2015. The results indicate the presence of five clubs with four countries belonging to the non- convergent group. After identifying the clubs, the study analyzed the transitional behaviors among the clubs. Finally, to understand the determinant of the club membership, we used the ordered logit model by considering the initial level of GDP, gross capital formation, growth rate of population, and four indices, namely social, governance, sustainability, and globalization as the explanatory variables. The results suggest that the initial level of GDP per capita, gross capital formation, social, governance, sustainability, and globalization are the major factors for determining the club.

Automated summary

This paper aims to identify club convergence among 102 countries from 1996 to 2015 based on GDP per capita, revealing five clubs with transitional behaviors. The study finds that the initial level of GDP per capita, gross capital formation, social, governance, sustainability, and globalization are major factors determining club membership.