Beta Convergence in the Export Volumes in EU Countries

Abstract

This paper investigates the β-convergence in the trade volumes of EU countries. We focus on a different approach to convergence analysis, namely trade's contribution to convergence. Neoclassical growth theory assumes there will be a convergence process among the economies, even in absence of trade. Trade relations might, however, speed up this process. We use panel data for trade volumes of 26 EU countries and test the presence and the speed of β-convergence pattern on SITC sectors 6 and 7 trade categories. The implied speeds of unconditional convergence of the export volume per capita are about 0.05-0.06 (implying half-lives around 12-13 years). When accounting for the country-or time-period specific effects, we can observe relatively high convergence rates (with half-lives somewhere around 2-4 years).

The Effect of Import on Export Growth and Convergence: A Spatial Analysis in Türkiye

“…Consistent with the first hypothesis, this study suggests that there is a tendency for convergence in per capita exports across 81 provinces in Türkiye at an average annual rate of 4% from 2004 to 2021. This rate is similar to the results revealed by Kremer et al (2022) and Radiměřský and Hajko (2016) who study the convergence of trade between countries. The rate of absolute convergence in export growth estimated for Türkiye is twice as high as the "iron law" of 2%.…”

“…The tendency for convergence is similar to the results revealed by Kremer et al (2022) and Radiměřský and Hajko (2016) who study the convergence of trade between countries. On the other hand, our study differs from previous research in some respects.…”

“…On the other hand, our study differs from previous research in some respects. Considering the trade of SITC6 and STIC7 products in their studies for EU countries, Radiměřský and Hajko (2016) calculate the absolute and conditional convergence rates as 5.3-5.5% and 13.2-14.9%, respectively. In other words, they suggest that the conditional convergence rate is more than twice the absolute convergence rate.…”

“…Chapsa et al (2015) verify that trade openness is one of the strong drivers of growth for the EU-15. One of the few studies dealing with export convergence, Radiměřský and Hajko (2016) examine the convergence of trade volumes in EU countries for the period 2002-2014 by SITC (Standard International Trade Classification) sub-categories. They estimate both absolute and conditional convergence of about 5-6% and 14-16% respectively, depending on the subcategory in per capita exports.…”

The Improvement of Trade Convergence by Beta and Euclidean Techniques: Evidence from a three stage convergence procedure

“…Furthermore, another strand of the literature examines the issue of income convergence which was based on the neoclassical growth model as introduced by Solow [50] and Swan [52]. Their model was used for many countries in several studies such as Barro & Sala-i-Martin [7], Sala-i-Martin [45], Quah [40], Bernard & Durlauf [11], Rodrik [42]- [43] and the results provided evidence showing the prediction of income convergence based on the Solow-Swan model. Barro & Sala-i-Martin [7] proposed beta convergence as a possible type of convergence which examines the aspect of whether there is a negative tendency between the growth rates of countries and the initial level of real income per capita.…”