Identification and Estimation of Club Convergence Models with Spatial Dependence

Abstract

This article deals with heterogeneity and spatial dependence in economic growth analysis by developing a two‐stage strategy that identifies clubs by a mapping analysis and estimates a club convergence model with spatial dependence. Since estimation of this class of convergence models in the presence of regional heterogeneity poses both identification and collinearity problems, we develop an entropy‐based estimation procedure that simultaneously takes account of ill‐posed and ill‐conditioned inference problems. The two‐step strategy is applied to assess the existence of club convergence and to estimate a two‐club spatial convergence model across Italian regions over the period 1970 to 2000.

Spatial Club Convergence of Regional Economic Growth in Inland China

“…In order to overcome the limits of the approach of purely temporal club convergence, we believe that it is necessary to advance the concept of spatial club convergence, based on the phenomena of spatial correlation, spatial heterogeneity and clustering of regional economic growth, to fully describe the spatial concentration or regional clustering phenomenon associated frequently with regional economic growth. This paper defines spatial club convergence as follows: it is the economic growth (or decline) of a group of regions which are spatially adjacent and have similar initial conditions and structural characteristics that converge to the same steady state [28,29]. If there is spatial club convergence among regions, they will form a spatially convergence club.…”

Spatial Heterogeneity and Spillovers of Employment in the EU Regions

“…The spatial aspects have been already incorporated, e.g., in many studies dealing with regional income convergence (Qin et al, 2017;Chocholatá and Furková, 2017;Lolayekar and Mukhopadhyay, 2019) at which it is assumed that spatial spillover effects will have a significant impact on income convergence of regions. Also, we can find several studies that handle issue of spatial heterogeneity and their results indicate that economic behaviour is unstable in space, and income convergence is characterized by multiple local equilibrium states -convergence clubs (Qin et al, 2017;Papalia and Betarelli, 2012;Pan et al, 2015;Furková, 2020).…”