Convergence and catching up in ASEAN: a comparative analysis

TLDR

Economic growth in Southeast Asia varies widely, prompting studies of income convergence and the emergence of convergence clubs among ASEAN‑5 countries. The study seeks to identify whether ASEAN‑5 countries form a convergence club with each other and with the United States, and to assess if ASEAN‑5 is technologically catching up to the U.S. To address these questions, the authors employ various time‑series convergence tests and analyze technological diffusion indicators between ASEAN‑5 and the U.S.

Abstract

The increasing diversity of average growth rates and income levels across countries has generated a large literature on testing the income convergence hypothesis. Most countries in South-East Asia, particularly the five founding ASEAN member countries (ASEAN-5), have experienced substantial economic growth, with the pace of growth having varied substantially across countries. Recent empirical studies have found evidence of several convergence clubs, in which per capita incomes have converged for selected groupings of countries and regions. This paper applies different time series tests of convergence to determine if there is a convergence club for ASEAN-5, as well as ASEAN-5 and the USA. The catching up hypothesis states that the lagging country, with low initial income and productivity levels, will tend to grow more rapidly by copying the technology of the leader country, without having to bear the associated costs of research and development. Given the important effects of technological change on growth, this paper also examines whether ASEAN-5 is catching up technologically with the USA.