A theoretical review on the structural convergence issue and the relation to economic development in integration areas

Abstract

The aim of the paper is to provide a consistent literature review on the importance of structural convergence for the countries within the same economic area focusing on two main topics: the structural similarity problem of countries within an integration area and the evolution and development of the union itself (in line with Chenery and Singer’s approach). We aim to synthesize the most referential findings of the literature and project them on the most recent events in the European Union pointing out the relevance of structural convergence and of the continuation of the process under a reassessed form. The relevance of studying the structural convergence process lies in the medium and long term implications related to the synchronization of business cycles, long-run development patterns and of the dynamics of specialization. Moreover, the topic is of high interest both in the context of the future evolution of the European Union and in the decision making process of adopting the Euro in Romania’s case. On the side of theoretical papers, there is a rich literature on structural change that generally recommends that economic structures and the differences between them should be the starting point for analysis and development of theories of economic development. We believe that the preoccupations for this topic should be recalled in the context of the European events and new facets should be explored. Along with the views expressed in the European Commission White Paper, that the form will follow the function, we emphasize the importance of designing the proper institutions at European Union and Eurozone level, but also at national level with taking into consideration the goal of advancing towards structural convergence.

Structural Convergence between African Countries: Empirical Evidence

“…However, correlation does not necessarily mean causality. The variables popdiff and savingcapdiff 6 show mixed correlations with the different KSI. The variable savingcapdiff shows a positive and significant correlation with the variable incomdiff, which augurs well with its use as an instrument.…”

“…Table 9: FGLS estimates employment data for ECCAS [equations (3)(4)(5), (3)(4)(5)(6) and After addressing the five regional sub-sets that cover the entire African continent, we find that structural convergence is a reality across the continent. For the robustness check in the next section, we use estimation methods such as the Tobit model, instrumental variables, and Granger non-causality test.…”

“…According to Wacziarg (2001) and, Palan and Schmiedeberg (2010), the concept of structural convergence has received little attention in the existing literature. structural convergence on the theoretical level is a rather complex concept and on the empirical level it is also a phenomenon quite difficult to highlight, thus making its definitions neither too strict nor too precise and refers to a wide range of conditions that must be fulfilled by structurally converging economies and still remain open to be completed (Alexoaei and Robu 2018).…”

“…In this section, we address equations to(3)(4)(5)(6)(7) in order to investigate the structural convergence of African countries. The basic statistics for the annual frequency data for all the variables used in this section are summarized in Table2calculated by authors.…”