DOES TOTAL FACTOR PRODUCTIVITY CONVERGE AMONG ASEAN COUNTRIES?
Keywords:
Total factor productivity; Convergence; Lagrange multiplier; ASEAN.
Abstract
This paper examines the productivity convergence of the five original Association of
Southeast Asian Nations (ASEAN) countries, namely Indonesia, Malaysia, Philippines,
Singapore, and Thailand (ASEAN-5), using annual data spanning the period 1968
to 2014. Results from two-break Lagrange multiplier and residual augmented least
squares Lagrange multiplier unit root tests reveal strong evidence of productivity
convergence in case of ASEAN-5. Further, the results based on Phillips–Sul panel
club convergence also reveal productivity convergence. To check the robustness of
our finding, we use an alternative measure of total factor productivity and still find
evidence of convergence. We infer that such productivity improvements may help
ASEAN countries to achieve a higher pace of economic growth.
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References
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Evidence from Club Converging. Applied Economic Letters, 23, 142-145.
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Baumol, W. J. and Wolff, E.N. (1988). Productivity Growth, Convergence, and
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Baumol, W. J. (1986). Productivity Growth, Convergence, and Welfare: What the
Long Run Data Show. American Economic Review, 76, 1072-1085.
Baumol, W. J., Nelson, R. R. and Wolff, E.N. (1994). Convergence of Productivity:
Cross-National Studies and Historical Evidence. Oxford University Press.
Ben-David, D. and Loewy, M. B. (1998). Free Trade, Growth, and Convergence.
Journal of Economic Growth, 3, 143-170.
Ben-David, D. (1996). Trade and Convergence Among Countries. Journal of
International Economics, 40, 279-298.
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Productivity Convergence and Measurement Across Industries and Countries.
American Economic Review, 86, 1216-1238.
Bernard, A. B., and Jones, Charles I. (1996b). Productivity Across Industries and
Countries: Time Series Theory and Evidence. Review of Economics and Statistics,
78, 135-146.
Bernard, A. B., and Durlauf, Steven N. (1995). Convergence in International
Output. Journal of Applied Econometrics, 10, 97-108.
Bliss, C. (2000). Galton’s Fallacy and Economic Convergence: A Reply to Cannon
and Duck. Oxford Economic Papers, 52, 420–422.
Cornwell, M.C and Wachter, Jens-Uwe. (1998). Productivity Convergence and
Economic Growth: A Frontier Production Function Approach, Zentrumfür
Europäische Integrationsforschung. Working Paper, 6, (http: //www.zei.de).
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American Economic Review, 78, 1138-54.
Feenstra, Robert C., Inklaar, R., and Timmer, Marcel P. (2015). The Next Generation
of the Penn World Table. American Economic Review, 105, 3150-3182.
Islam, Nazrul. (1995). Growth Empirics: A Panel Data Approach. Quarterly Journal
of Economics, 110, 1127-1170.
Jayanthakumaran, K., and Verma, R. (2008). International Trade and Regional
Income Convergence: The ASEAN-5 Evidence. ASEAN Economic Bulletin, 25,
179-194.
Krugman, P. (1994). The Age of Diminished Expectations: U.S. Economic Policy in the
1990s. Third Edition, MIT Press.
Lee, J., Strazicich, M.C., and Meng, M. (2012). Two-Step LM Unit Root Tests with
Trend Breaks. Journal of Statistical and Econometric Methods, 1, 81-107.
Lim, L., and Mcaleer, M. (2004). Convergence and Catching Up in ASEAN: A
Comparative Analysis. Applied Economics, 36, 137–153.
Maryam, K., and Jehan, Z. (2018). Total Factor Productivity Convergence in
Developing Countries: Role of Technology Diffusion. South African Journal of
Economics, https://doi.org/10.1111/saje.12189
Masron, T. A., and Yusop, Z. (2008). AFTA, Income Growth and Income
Convergence in ASEAN, The International Trade Journal, 22, 290-314.
Meng, M., K. Im, J. Lee, and Tieslau, M. (2014). More Powerful LM Unit Root Tests
with Non-Normal Errors. The Festschrift in Honor of Peter Schmidt, edited by R.
Sickles and W. Horrace, 343–357. Germany: Springer Publishing Co.
Mishra, V. and Smyth, R. (2014). Convergence in Energy Consumption Per Capita
Among ASEAN Countries. Energy Policy, 73, 180-185.
Mishra, V. and Smyth, R., (2017). Conditional Convergence in Australia’s Energy
Consumption at Sector Level. Energy Economics, 62, 396-403.
Narayan, P. K. and Smyth, R., (2007). Are Shocks to Energy Consumption
Permanent or Temporary? Evidence from 182 Countries. Energy Policy, 35, 333-
341.
Narayan, P. K. (2007). Do Health Expenditures ‘Catch Up’? Evidence from OECD
Countries. Health Economics, 16, 993-1008.
Neogi, C., (2016). Productivity Convergence and Asian Trade Blocs. In Handbook of
Research on Global Indicators of Economic and Political Convergence (Ed) by R. C.
Das, IGI Global, Ch. 5: 92-118.
Phillips, P.C.B., and Sul, D. (2007). Transition Modeling and Econometric
Convergence Tests. Econometrica, 75, 1771–1855.
Quah, D., (1993). Galton’s Fallacy and the Tests of the Convergence Hypothesis.
Scandinavian Journal of Economics, 95, 427–443.
Quah, D., (1996). Twin Peaks: Growth and Convergence in Models of Distribution
Dynamics. The Economic Journal, 106, 1045–55.
Sachs, J., D., and Warner, A., M. (1995). Economic Convergence and Economic
Policies. CASE Network Studies and Analyses No. 35. Available at SSRN:
https://ssrn.com/abstract=1479610 or http://dx.doi.org/10.2139/ssrn.1479610
Solarin, S. A., Ahmed, E. M., and Dahalan, J. (2014). Income Convergence Dynamics
In ASEAN and SAARC Blocs. New Zealand Economic Papers, 48, 285-300.
Wang, M. S. (2012). Income Convergence within ASEAN, ASEAN+3: a Panel Unit
Root Approach. Applied Economic Letters, 19, 417-423.
World Employment Report. (2004-05). Employment, Productivity and Poverty
Reduction. International Labour Organization, Geneva.
Evidence from Club Converging. Applied Economic Letters, 23, 142-145.
Barro, R. J. and Sala-i-Martin, X. (1991). Convergence Across States and Regions.
Brooking Papers Economic Activity, 1, 107-182.
Barro, R.J. and Sala-i-Martin, X. (1992). Convergence. Journal of Political Economy,
100, 223-251.
Baumol, W. J. and Wolff, E.N. (1988). Productivity Growth, Convergence, and
Welfare: Reply. American Economic Review, 78, 1155-1159.
Baumol, W. J. (1986). Productivity Growth, Convergence, and Welfare: What the
Long Run Data Show. American Economic Review, 76, 1072-1085.
Baumol, W. J., Nelson, R. R. and Wolff, E.N. (1994). Convergence of Productivity:
Cross-National Studies and Historical Evidence. Oxford University Press.
Ben-David, D. and Loewy, M. B. (1998). Free Trade, Growth, and Convergence.
Journal of Economic Growth, 3, 143-170.
Ben-David, D. (1996). Trade and Convergence Among Countries. Journal of
International Economics, 40, 279-298.
Bernard, A. B., and Jones, Charles I. (1996a). Comparing Apples to Oranges:
Productivity Convergence and Measurement Across Industries and Countries.
American Economic Review, 86, 1216-1238.
Bernard, A. B., and Jones, Charles I. (1996b). Productivity Across Industries and
Countries: Time Series Theory and Evidence. Review of Economics and Statistics,
78, 135-146.
Bernard, A. B., and Durlauf, Steven N. (1995). Convergence in International
Output. Journal of Applied Econometrics, 10, 97-108.
Bliss, C. (2000). Galton’s Fallacy and Economic Convergence: A Reply to Cannon
and Duck. Oxford Economic Papers, 52, 420–422.
Cornwell, M.C and Wachter, Jens-Uwe. (1998). Productivity Convergence and
Economic Growth: A Frontier Production Function Approach, Zentrumfür
Europäische Integrationsforschung. Working Paper, 6, (http: //www.zei.de).
De Long, J. B. (1988). Productivity Growth, Convergence, and Welfare: Comment.
American Economic Review, 78, 1138-54.
Feenstra, Robert C., Inklaar, R., and Timmer, Marcel P. (2015). The Next Generation
of the Penn World Table. American Economic Review, 105, 3150-3182.
Islam, Nazrul. (1995). Growth Empirics: A Panel Data Approach. Quarterly Journal
of Economics, 110, 1127-1170.
Jayanthakumaran, K., and Verma, R. (2008). International Trade and Regional
Income Convergence: The ASEAN-5 Evidence. ASEAN Economic Bulletin, 25,
179-194.
Krugman, P. (1994). The Age of Diminished Expectations: U.S. Economic Policy in the
1990s. Third Edition, MIT Press.
Lee, J., Strazicich, M.C., and Meng, M. (2012). Two-Step LM Unit Root Tests with
Trend Breaks. Journal of Statistical and Econometric Methods, 1, 81-107.
Lim, L., and Mcaleer, M. (2004). Convergence and Catching Up in ASEAN: A
Comparative Analysis. Applied Economics, 36, 137–153.
Maryam, K., and Jehan, Z. (2018). Total Factor Productivity Convergence in
Developing Countries: Role of Technology Diffusion. South African Journal of
Economics, https://doi.org/10.1111/saje.12189
Masron, T. A., and Yusop, Z. (2008). AFTA, Income Growth and Income
Convergence in ASEAN, The International Trade Journal, 22, 290-314.
Meng, M., K. Im, J. Lee, and Tieslau, M. (2014). More Powerful LM Unit Root Tests
with Non-Normal Errors. The Festschrift in Honor of Peter Schmidt, edited by R.
Sickles and W. Horrace, 343–357. Germany: Springer Publishing Co.
Mishra, V. and Smyth, R. (2014). Convergence in Energy Consumption Per Capita
Among ASEAN Countries. Energy Policy, 73, 180-185.
Mishra, V. and Smyth, R., (2017). Conditional Convergence in Australia’s Energy
Consumption at Sector Level. Energy Economics, 62, 396-403.
Narayan, P. K. and Smyth, R., (2007). Are Shocks to Energy Consumption
Permanent or Temporary? Evidence from 182 Countries. Energy Policy, 35, 333-
341.
Narayan, P. K. (2007). Do Health Expenditures ‘Catch Up’? Evidence from OECD
Countries. Health Economics, 16, 993-1008.
Neogi, C., (2016). Productivity Convergence and Asian Trade Blocs. In Handbook of
Research on Global Indicators of Economic and Political Convergence (Ed) by R. C.
Das, IGI Global, Ch. 5: 92-118.
Phillips, P.C.B., and Sul, D. (2007). Transition Modeling and Econometric
Convergence Tests. Econometrica, 75, 1771–1855.
Quah, D., (1993). Galton’s Fallacy and the Tests of the Convergence Hypothesis.
Scandinavian Journal of Economics, 95, 427–443.
Quah, D., (1996). Twin Peaks: Growth and Convergence in Models of Distribution
Dynamics. The Economic Journal, 106, 1045–55.
Sachs, J., D., and Warner, A., M. (1995). Economic Convergence and Economic
Policies. CASE Network Studies and Analyses No. 35. Available at SSRN:
https://ssrn.com/abstract=1479610 or http://dx.doi.org/10.2139/ssrn.1479610
Solarin, S. A., Ahmed, E. M., and Dahalan, J. (2014). Income Convergence Dynamics
In ASEAN and SAARC Blocs. New Zealand Economic Papers, 48, 285-300.
Wang, M. S. (2012). Income Convergence within ASEAN, ASEAN+3: a Panel Unit
Root Approach. Applied Economic Letters, 19, 417-423.
World Employment Report. (2004-05). Employment, Productivity and Poverty
Reduction. International Labour Organization, Geneva.
Published
2019-02-27
How to Cite
Rath, B. (2019). DOES TOTAL FACTOR PRODUCTIVITY CONVERGE AMONG ASEAN COUNTRIES?. Buletin Ekonomi Moneter Dan Perbankan, 21, 477-494. https://doi.org/10.21098/bemp.v0i0.962
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