Regional Convergence in Latin America

Abstract

This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper presents empirical evidence on convergence of per capita output for regions within six large middle-income Latin American countries: Argentina, Brazil, Chile, Colombia, Mexico, and Peru. It explores the role played by several exogenous sectoral shocks and differences in steady states within each country. It finds that poor and rich regions within each country converged at very low rates over the past three decades. It also finds evidence of regional "convergence clubs" within Brazil and Peru-the estimated speeds of convergence for these countries more than double after controlling for different subnational levels of steady state. For the latter countries and Chile, convergence is also higher after controlling for sector-specific shocks. Finally, results show that national disparities in per capita output increased temporarily after each country pursued trade liberalization. JEL Classification Numbers: C21, O47, O56, R11

Peru's Regional Growth and Convergence in 1979-2017: An Empirical Spatial Panel Data Analysis

“…These results indicate that there is a long-run convergence among Peru's regions. Compared with other studies that use convergence with the same territorial scale, this coe¢ cient is higher than reported by Delgado and del Pozo Segura (2011) and Sutton et al (2006) for Peru.…”

“…For Peru, studies such as Gonzales de Olarte and Trelles Cassinelli (2004); Sutton et al (2006); Delgado and del Pozo Segura (2011); and Delgado and Rodríguez (2017) estimate the rate of convergence among regions but do not test for the presence of spatial dependence among them. It is possible, however, that if per capita GDP in Peru's regions are spatially correlated, the rates of convergence found in these papers could be biased.…”

Investigating the Heterogeneity of Economic Convergence in Latin America Countries – An Econometric Analysis of Systems of Regression Equations

“…This variability of income inequalities seems to be the main reason for the non-existence of the sigma convergence. Sutton et al (2006) investigated the absolute and conditional convergence between 6 Latin American countries analysing the period from 1970 to 2001. There was nearly no evidence for the absolute convergence within the analysed region.…”

Development of Regional Economics Studies in Peru: Contributions and Criticisms

“…In spite of this, one of the most prominent themes observed in the regional literature of Peru is economic convergence and the proposal of macro-region constructions; that is, if, from similar characteristics between the regions, they can be grouped with the purpose of proposing political improvements. Among these studies, the ones by Gonzales de Olarte and Trelles Cassinelli (2004); Sutton et al (2006); Delgado and Del Pozo Segura (2011); Rodríguez (2015, 2017) stand out. These investigations have tried to estimate convergence rates of GDP per capita between different regions; that is, whether there is a point of long-term convergence among all of them.…”