Evidence on the convergence of per capita income: a comparison of founder members of the Association of South East Asian Nations and the South Asian Association of Regional Cooperation

Authors

Kankesu Jayanthakumaran, University of WollongongFollow
Shao-Wei Lee, Taiwan Academy of Banking and FinanceFollow

RIS ID

74749

Publication Details

Jayanthakumaran, K. & Lee, S. (2013). Evidence on the convergence of per capita income: a comparison of founder members of the Association of South East Asian Nations and the South Asian Association of Regional Cooperation. Pacific Economic Review, 18 (1), 108-121.

Abstract

This paper investigates the per capita income convergence patterns of a set of Association of South East Asian Nations (ASEAN) and South Asian Association of Regional Cooperation (SAARC) countries. We obtained a time-series analysis for stochastic convergence by applying unit-root tests in the presence of two endogenously-determined structural breaks. We then supplemented the results by tests that produced evidence for b convergence. The evidence shows that the relative per capita income series of ASEAN-5 countries were consistent with stochastic convergence and b convergence, but this was not found for SAARC-5 countries. For the ASEAN-5 countries, the structural breaks associated with the world oil crisis and the Asian crisis impacted heavily on the convergence/divergence process.