Effect of World Governance Indicators on the Convergence Level

Authors

DOI:

https://doi.org/10.4067/S0718-88702021000200077

Keywords:

Convergence, growth, institutions, log-t test, logistic regression

Abstract

The research aims to analyze the degree of impact of institutional quality on the level of convergence in the world through a two-step approach. First, we identified convergence clubs using the log-t test in 176 countries during 1996-2018. Second, through the ordered logistic regression we investigate the probability of belonging to a certain club, according to institutional quality. The research presents two fundamental contributions. First, a different methodological approach. Second, there are six clubs and two determining factors for a high level of convergence, while the rest of the factors increase the probability of belonging to a middle-income group.

Downloads

Download data is not yet available.

References

Acemoglu, D. (2009). Introduction to modern economic growth. Princeton University Press.

Acemoglu, D., Johnson, S., & Robinson, J. A. (2001). The colonial origins of comparative development: An empirical investigation. American Economic Review, 91(5), 1369–1401. https://doi.org/10.1257/aer.91.5.1369

Acemoglu, D., & Robinson, J. (2006). De facto political power and institutional persistence. American Economic Review, 96(2), 325–330. https://doi.org/10.1257/000282806777212549

Acemoglu, D., & Robinson, J. (2008). Persistence of power, elites, and institutions. American Economic Review, 98(1), 267–293. https://doi.org/10.1257/aer.98.1.267

Bai, J., & Ng, S. (2002). Determining the number of factors in approximate factor models. Econometrica, 70(1), 191–221. https://doi.org/10.1111/1468-0262.00273

Balsalobre, D., & Álvarez, A. (2016). Economic growth and energy regulation in the environmental Kuznets curve. Environmental Science and Pollution Research, 23(16), 16478–16494. https://doi.org/10.1007/s11356-016-6773-3

Banco Mundial. (2019). Nueva clasificación de los países según el nivel de ingresos para 2019 y 2020 [New country classifications by income level for 2019 and 2020]. World Bank Blogs. https://blogs.worldbank.org/es/opendata/nueva-clasificacion-de-los-paises-segun-el-nivel-de-ingresos-para-2019-y-2020

Banco Mundial. (2020a). World development indicators [Base de datos]. https://datacatalog.worldbank.org/dataset/world-development-indicators

Banco Mundial. (2020b). Worldwide governance indicators (WGI) [Base de datos]. https://info.worldbank.org/governance/wgi/

Barro, R., & Sala-i-Martin, X. (1992). Convergence. Journal of Political Economy, 100(2), 223–251. https://doi.org/10.1086/261816

Barro, R., & Sala-i-Martin, X. (2004). Economic growth (2nd ed.). Massachusetts Institute of Technology.

Baumol, W. (1986). Productivity growth, convergence, and welfare: What the long-run data show. The American Economic Review, 76(5), 1072–1085.

Bernard, A. B., & Durlauf, S. N. (1995). Convergence in international output. Journal of Applied Econometrics, 10(2), 97–108. https://doi.org/10.1002/jae.3950100202

Bernard, A., & Durlauf, S. (1996). Interpreting tests of the convergence hypothesis. Journal of Econometrics, 71(1), 161–173. https://doi.org/10.1016/0304-4076(94)01699-2

Blackburn, K., Bose, N., & Haque, M. E. (2006). The incidence and persistence of corruption in economic development. Journal of Economic Dynamics and Control, 30(12), 2447–2467. https://doi.org/10.1016/j.jedc.2005.07.007

Butkus, M., Mačiulytė-Šniukienė, A., & Matuzevičiūtė, K. (2020). Mediating effects of cohesion policy and institutional quality on convergence between EU regions: An examination based on a conditional beta-convergence model with a 3-way multiplicative term. Sustainability, 12(7), 3025. https://doi.org/10.3390/su12073025

Carlino, G., & Mills, L. (1993). Are U.S. regional incomes converging? A time series analysis. Journal of Monetary Economics, 32(2), 335–346. https://doi.org/10.1016/0304-3932(93)90009-5

Chamberlain, G., & Rothschild, M. (1983). Arbitrage, factor structure, and mean-variance analysis on large asset markets. Econometrica, 51(5), 1281–1304. https://doi.org/10.2307/1912275

Chatterji, M. (1992). Convergence clubs and endogenous growth. Oxford Review of Economic Policy, 8(4), 57–69. https://doi.org/10.1093/oxrep/8.4.57

Connor, G., & Korajczyk, R. A. (1986). Performance measurement with the arbitrage pricing theory: A new framework for analysis. Journal of Financial Economics, 15(3), 373–394. https://doi.org/10.1016/0304-405X(86)90027-9

Di Cataldo, M., & Monastiriotis, V. (2018). An assessment of EU Cohesion Policy in the UK regions: Direct effects and the dividend of targeting (LEQS – LSE "Europe in Question" Discussion Paper N.º 135). https://www.lse.ac.uk/european-institute/Assets/Documents/LEQS-Discussion-Papers/LEQSPaper135.pdf

Elert, N., & Halvarsson, D. (2012). Economic freedom and institutional convergence (Working Paper N.º 196). Ratio.

Evans, P., & Karras, G. (1996). Convergence revisited. Journal of Monetary Economics, 37(2), 249–265. https://doi.org/10.1016/S0304-3932(96)90036-7

Gujarati, D., & Porter, D. (2010). Econometría [Econometrics] (5.ª ed.). McGraw Hill.

Hall, R., & Jones, C. (1999). Why do some countries produce so much more output per worker than others? The Quarterly Journal of Economics, 114(1), 83–116. https://doi.org/10.1162/003355399555954

Hausman, J. (1978). Specification tests in econometrics. Econometrica, 46(6), 1251–1271. https://doi.org/10.2307/1913827

Kar, S., Roy, A., & Sen, K. (2019). The double trap: Institutions and economic development. Economic Modelling, 76, 243–259. https://doi.org/10.1016/j.econmod.2018.08.002

Knack, S. (1996). Institutions and the convergence hypothesis: The cross-national evidence. Public Choice, 3-4, 207–228. https://doi.org/10.1007/BF00118645

Knack, S., & Keefer, P. (1995). Institutions and economic performance: Cross-country tests using alternative institutional measures. Economics & Politics, 7(3), 207–227. https://doi.org/10.1111/j.1468-0343.1995.tb00111.x

McKelvey, R., & Zavoina, W. (1975). A statistical model for the analysis of ordinal level dependent variables. The Journal of Mathematical Sociology, 4(1), 103–120. https://doi.org/10.1080/0022250X.1975.9989847

Moon, H. R., & Perron, B. (2004). Testing for a unit root in panels with dynamic factors. Journal of Econometrics, 122(1), 81–126. https://doi.org/10.1016/j.jeconom.2003.10.020

Omri, A., & Ben Mabrouk, N. (2020). Good governance for sustainable development goals: Getting ahead of the pack or falling behind? Environmental Impact Assessment Review, 83, 106388. https://doi.org/10.1016/j.eiar.2020.106388

Phillips, P., & Sul, D. (2007). Transition modeling and econometric convergence tests. Econometrica, 75(6), 1771–1855. https://doi.org/10.1111/j.1468-0262.2007.00811.x

Phillips, P., & Sul, D. (2009). Economic transition and growth. Journal of Applied Econometrics, 24(7), 1153–1185. https://doi.org/10.1002/jae.1080

Quah, D. (1996). Regional convergence clusters across Europe. European Economic Review, 40(3), 951–958. https://doi.org/10.1016/0014-2921(95)00105-0

Quah, D. (1997). Empirics for growth and distribution: Stratification, polarization, and convergence clubs. Journal of Economic Growth, 2(1), 27–59. https://doi.org/10.1023/A:1009781613339

Rodrik, D., Subramanian, A., & Trebbi, F. (2004). Institutions rule: The primacy of institutions over geography and integration in economic development. Journal of Economic Growth, 9(2), 131–165. https://doi.org/10.1023/B:JOEG.0000031425.72248.85

Savoia, A., & Sen, K. (2016). Do we see convergence in institutions? A cross-country analysis. The Journal of Development Studies, 52(2), 166–185. https://doi.org/10.1080/00220388.2015.1060315

Temple, J. (1999). The new growth evidence. Journal of Economic Literature, 37(1), 112–156. https://doi.org/10.1257/jel.37.1.112

World Bank Group. (2020). Worldwide governance indicators (WGI) project [Base de datos]. https://info.worldbank.org/governance/wgi/

Published

2021-11-15

How to Cite

Tinizhañay Peralta, J. P. (2021). Effect of World Governance Indicators on the Convergence Level. Economic Analysis Review, 36(2), 77–94. https://doi.org/10.4067/S0718-88702021000200077

Issue

Section

Articles

Article usage

ViewsTimes this article's page was opened since the journal started recording statistics. One person can visit more than once.
94
DownloadsTimes the full text of this article (usually the PDF) was opened or downloaded.
159

All time, as recorded by the journal.

Last 2 years: 85 views, 120 downloads.

CitationsTimes other scholarly works cited this article, according to OpenAlex and Crossref. The two indexes cover different sources, so their counts differ. : OpenAlex 3 · Crossref 1

Main countries of traffic origin:Countries this article was consulted from, according to the internet connection. They are not necessarily people. Germany 52% · United States 16% · China 5%

1.69 downloads per view (journal average 1.52).Downloads of the full text for every abstract view of this article, compared with the whole journal.

Explore the journal's metrics