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Convergence or divergence of prosperity within the ASEAN community? A crucial issue for the success of the ASEAN economic community (AEC) process

Convergence or divergence of prosperity within the ASEAN community? A crucial issue for the... PurposeThe purpose of this paper is to scrutinize the economic development of ASEAN countries during the period 2000-2014 (after the crisis) with the aim of detecting the convergence and divergence of trends over this period and of providing a framework that could be used for subsequent studies in the future.Design/methodology/approachBased on the models developed by Solow (1956) and Barro and Sala-i-Martin (1991), the authors estimate absolute and conditional β-convergence through OLS, pooled OLS and pooled OLS with time period effect. The absolute β-convergence can be modelled by the relationship between the log of the compound annual growth rate of GDP per capita (GDPC) (or per worker) and the initial level of GDPC (or per worker). The conditional β-convergence is modelled by the same relationship, supplemented by other factors potentially affecting the growth.FindingsThe findings indicate an average annual rate of σ-convergence per annum of approximately 1 per cent, and of 0.4-0.6 per cent for β-convergence, over the period 2000-2014. Compared to other macro-regions (e.g. the European Union), these rates of convergence among ASEAN countries are relatively low.Social implicationsThe ASEAN roadmap should address two interlinked challenges: the first one is to achieve coordination of the macroeconomic, institutional, legal and social policies within the area. The second one is to address the specific microeconomic drivers of each member state to achieve increased sustainable development.Originality/valueThis paper identifies the contradictory results found in previous studies on ASEAN convergence and attempts to clearly determine the optimal sample, sample time period and estimation approaches to obtain sound results regarding convergence processes. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Emerging Markets Emerald Publishing

Convergence or divergence of prosperity within the ASEAN community? A crucial issue for the success of the ASEAN economic community (AEC) process

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1746-8809
DOI
10.1108/IJoEM-09-2016-0231
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to scrutinize the economic development of ASEAN countries during the period 2000-2014 (after the crisis) with the aim of detecting the convergence and divergence of trends over this period and of providing a framework that could be used for subsequent studies in the future.Design/methodology/approachBased on the models developed by Solow (1956) and Barro and Sala-i-Martin (1991), the authors estimate absolute and conditional β-convergence through OLS, pooled OLS and pooled OLS with time period effect. The absolute β-convergence can be modelled by the relationship between the log of the compound annual growth rate of GDP per capita (GDPC) (or per worker) and the initial level of GDPC (or per worker). The conditional β-convergence is modelled by the same relationship, supplemented by other factors potentially affecting the growth.FindingsThe findings indicate an average annual rate of σ-convergence per annum of approximately 1 per cent, and of 0.4-0.6 per cent for β-convergence, over the period 2000-2014. Compared to other macro-regions (e.g. the European Union), these rates of convergence among ASEAN countries are relatively low.Social implicationsThe ASEAN roadmap should address two interlinked challenges: the first one is to achieve coordination of the macroeconomic, institutional, legal and social policies within the area. The second one is to address the specific microeconomic drivers of each member state to achieve increased sustainable development.Originality/valueThis paper identifies the contradictory results found in previous studies on ASEAN convergence and attempts to clearly determine the optimal sample, sample time period and estimation approaches to obtain sound results regarding convergence processes.

Journal

International Journal of Emerging MarketsEmerald Publishing

Published: Jul 17, 2017

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