Convergence Triggers in Africa: Evidence from Convergence Clubs and Panel Models

This paper investigates the formation of convergence clubs and examines the drivers of growth convergence in Africa by accounting for individual heterogenous effects and establishing transitional paths. We particularly employ the sophisticated log t test to identify underlying convergence clubs and...

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Bibliographic Details
Published in:The South African Journal of economics 2021-06, Vol.89 (2), p.218-245
Main Authors: Garang, Aweng Peter Majok, Erkekoglu, Hatice
Format: Article
Language:English
Subjects:
Adoption of innovations
Capital formation
Clubs
Convergence
Convergence clubs
Development policy
drivers of convergence
Economic analysis
economic growth
Generalized method of moments
Human capital
institutions
log t regression
Technological progress
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Summary:This paper investigates the formation of convergence clubs and examines the drivers of growth convergence in Africa by accounting for individual heterogenous effects and establishing transitional paths. We particularly employ the sophisticated log t test to identify underlying convergence clubs and use LSDVC as a benchmark model for analysing the drivers of convergence. We also apply the System Generalized method of moments (GMM) model for sensitivity purposes. Our results reveal four core convergence clubs; seemingly characterised by the measures of institutional stability with distinct transitional paths. We consequently highlight the importance of initial conditions, human capital and institutions in the formation of convergence clubs. Thus, the paper provides insights into the adoption of differentiated development policies consistent with the specific conditions of African countries with the integration agenda driven by accelerated levels of human capital development and technological progress.
ISSN:0038-2280
1813-6982
DOI:10.1111/saje.12282