Convergence among themselves and Middle-income trap of South-East Asian Nations: Findings from a New approach

Yaya, OlaOluwa S and Vo, Xuan Vinh and Adekoya, Oluwasegun B. (2021): Convergence among themselves and Middle-income trap of South-East Asian Nations: Findings from a New approach.

Abstract

This paper investigates the possibility of middle-income convergence among seven members of Southeast Asian nations (Indonesia, Laos, Malaysia, Myanmar, Philippines, Thailand, and Vietnam), with Malaysia being in upper-middle-income rank and other six countries in lower-middle-income rank. We apply unit root testing framework that allows for smooth nonlinearity, abrupt break, and cross-dependence in the income differences. Results show that these lower-middle-income countries are likely to converge among themselves, and also converge to the income level of Malaysia in the long run. Economic policies capable of stimulating long-run economic growth of these lower-middle-income countries is therefore recommended, and the countries should be ready to take up the challenge of upper-income country, like Malaysia.

• Item Type: MPRA Paper
• Language: English
• Keywords: Southeast Asia region; Cross-sectional dependency; Fourier function; Income convergence; Seemingly unrelated regression
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C19 - Other; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; N - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; Fluctuations > N17 - Africa ; Oceania

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