Convergence and the Caribbean

Abstract

This paper examines the convergence experience of selected Caribbean countries. It examines evidence of reduced dispersion in real per capita income—Sigma convergence—and 'catch up' growth across the group—Beta convergence. Estimation of the Solow—Swan cross-section model for the Caribbean shows weak evidence of β and σ convergence. However, structural instability and evidence of divergence over the sample period, suggest this convergence to be spurious. Further tests on individual country data showed an absense of steady state convergence for any country over time. Institutional structures and adjustments to economic shocks appear to have been important for the determination of per capita income in the long run.

Income Convergence of Central Asian Turkic Republics: A Panel Study for Beta and Sigma Convergences for Six Asian Economies

“…Some studies found the evidence of convergence (Barro and Sala‐i‐Martin, , ). Atkins and Boyd () applied the Solow‐Swan Model (Solow, and Swan, ) to a set of 14 Caribbean countries, called a “club” due to their similarities in many respects (technical progress, propensity to save, levels of capital, population growth, knowledge, etc. ), found only weak beta and sigma converge between higher and lower income countries over the time frame 1960–1993.…”

Convergence in the Eastern Caribbean States

“…Barro and Sala-I-Martin (1992) find evidence of convergence in a group of countries only after controlling for different steady states. Atkins and Boyd (1998) have studied convergence among CARICOM members and have found existence of different steady states. Barro and Sala-I-Martin (1992) introduced σ -convergence, a stringent measure of convergence, which is obtained when the dispersion of per capita income across countries or regions declines near zero over time.…”

“…The coefficients and the t-statistics of the control variables and the estimated rate of convergence are identical in both estimation methods. However, the adjusted R 2 declines when the first-difference is used, and this might have eliminated the possibility of a spurious regression, as found before for the region by Atkins and Boyd (1998). In this paper we focus on the estimates in first-differences and the estimates in levels are available upon request.…”

“…An earlier study for the Caribbean region by Atkins and Boyd (1998) has pointed out that the members of the Caribbean Community meet the criteria of similarity that are associated with the characteristics of a convergence club. However, they did not find strong evidence of long-run and persistent convergence; rather their findings of convergence vary in strength and are a consequence of individual circumstance, and not the automatic forces of stabilization.…”

“…Despite its two decades of existence, there are no studies that we could find that addressed the issue of convergence among the ECCB members other than Atkins and Boyd (1998). If the ECCB was successful in its stated goals with regard to all the members, then an increasing level of similarity should have arisen, hence strengthening the characteristics of a single convergence club.…”