To read the full version of this content please select one of the options below:

A sector-level analysis of output club convergence in case of a global economy

Vaseem Akram (Department of Liberal Arts, Indian Institute of Technology Hyderabad, Hyderabad, India)
Pradipta Kumar Sahoo (Department of Liberal Arts, Indian Institute of Technology Hyderabad, Hyderabad, India)
Badri Narayan Rath (Department of Liberal Arts, Indian Institute of Technology Hyderabad, Hyderabad, India)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 26 February 2020

Issue publication date: 27 July 2020

Abstract

Purpose

This paper investigates the per-capita output club convergence in case of 120 countries for the period 1995–2015. Further, we disaggregate per-capita output into three broad sectors such as agriculture, industry, and service and investigate the convergence hypothesis.

Design/methodology/approach

The paper tests this hypothesis using the Phillips and Sul panel club convergence technique.

Findings

Our findings are as follows: (1) our results indicate the evidence of output divergence for the full sample; (2) when countries are divided into different clubs, the results exhibit the sign of per capita output club convergence both for aggregate and three major sectors. Further, this study confirms that industry's per capita output is the main driver for aggregate per-capita output club convergence in case of club 1. For club 2, agriculture's per capita output is a primary source for aggregate per capita output club convergence. Likewise, in the case of clubs 3 and 4, we find the service sector's per capita output is the main component for aggregate per-capita output club convergence; (3) both the service and industry sectors are major drivers for aggregate per-capita output club convergence.

Practical implications

This study suggests to the policymaker that sector-specific policies need to be adopted to boost the per-capita output growth by improving the performance of each of the sectors across the countries.

Originality/value

Notwithstanding, there are many studies that examine the output convergence using a notion of beta and sigma convergence, but studies regarding per capita output club convergence both at the aggregate and sectoral level are scanty.

Keywords

Acknowledgements

The authors acknowledge the valuable suggestions received from the anonymous referee in the earlier draft of this paper. We acknowledge the help of Dr. Srirupa Chatterjee, Department of Liberal Arts, IIT Hyderabad for proofreading this manuscript. The usual disclaimer applies.

Citation

Akram, V., Sahoo, P.K. and Rath, B.N. (2020), "A sector-level analysis of output club convergence in case of a global economy", Journal of Economic Studies, Vol. 47 No. 4, pp. 747-767. https://doi.org/10.1108/JES-03-2019-0103

Publisher

:

Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited