Testing Sigma and Unconditional Beta Convergence of GDP for SAARC Countries: Can Inclusion of China further Consolidate the Convergence?

Abstract

The feasibility of economic integration for the South Asian Association for Regional Cooperation (SAARC) (7) and also the possibility of having a greater economic integration including China with South Asian countries have been examined in this article by testing for convergence of gross domestic product (GDP) per capita using sigma and unconditional beta convergence for the period 1970–2011. Empirical results show the convergence of GDP per capita for the specific time period. The formation of economic cooperation among SAARC (7) has accelerated the rate of convergence of GDP per capita. The possibility of a greater economic cooperation has been considered in this article. The article also outlines the proposition whether beta convergence is necessary and sufficient for sigma convergence or not.