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REGIONAL CONVERGENCE IN LARGE EMERGING ECONOMIES: A DISTRIBUTION DYNAMICS APPROACH

Published online by Cambridge University Press:  17 January 2020

Kiril Tochkov
Affiliation:
Texas Christian University
Corresponding
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Abstract

Rapid growth in large emerging economies has been spread unequally across their regions leading to growing income disparities. This paper examines the distribution of regional output per capita and the evolution of its shape in Brazil, China, India, and Russia from the mid-1990s to the mid-2010s. A comparative analysis of convergence is conducted using a nonparametric methodology. The results reveal different distribution dynamics across the four economies. Chinese regions with below-median output per capita have the highest probability of transitioning toward higher-income levels, while their Brazilian counterparts are trapped at the bottom of the distribution. Although India has the lowest and Russia one of the highest regional income inequalities, they display similar divergence patterns exemplified by high persistence at both ends of the distribution. Our findings indicate that government spending and the rule of law are the major driving forces behind regional convergence, except in Russia where they have the opposite effect. Innovation and property rights also promote convergence in China, but cause regional divergence in India.

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© Cambridge University Press 2020

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Footnotes

The author would like to thank Makram El-Shagi, Orn Bodvarsson, Hiro Ito, John Gallup, as well as the participants at the conferences of the Chinese Economists Society in Beijing, Higher School of Economics in Moscow, Henan University INFER Workshop on Applied Macroeconomics in Kaifeng, and the seminar at the Department of Economics at Portland State University for their helpful comments and suggestions.

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REGIONAL CONVERGENCE IN LARGE EMERGING ECONOMIES: A DISTRIBUTION DYNAMICS APPROACH
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