Are We Living in a Converging World? Regional Disparities and Convergences from a Global Perspective

Abstract

The aim of this study was to analyse regional disparity and convergence at a global level. Six global macro-regions were reflected: the EU, NAFTA, ASEAN, MERCOSUR, CIS and China. They represented 70% of global GDP and 65% of the global population. The disparities were measured for 223 micro-regions within three macro-regions (EU, NAFTA and China) and for 55 meso-regions (countries) within five macro-regions (EU, NAFTA, ASEAN, MERCOSUR and CIS). The study period was 2000-2008 (subject to availability of data). The methodology was based on the Gini coefficient, Disparity Range Coefficient (DRC), Average Disparity Range Coefficient (ADRC), and - and -convergence.

The results confirmed a mixed situation concerning the micro-regional disparity and its trend. These results suggested that the disparity levels varied considerably across the macro-regions from low to high. When disparity trends were calculated on GDP per capita, there were decreasing disparities in MERCOSUR, ASEAN and China. On the other hand, there was an increasing disparity trend in the EU and CIS. NAFTA showed only marginal fluctuations in this respect.

The convergence analysis results suggested that, based on the DRC analysis, none of the macro-regions converged. There were however differences. Five macro-regions diverged 1.4 to 12.68 times more quickly than the average macro-regional GDP per capita grew. This was the case for ASEAN, NAFTA, EU, China and CIS. MERCOSUR on the other hand diverged at a lower pace than the pace of macro-regional growth, namely at a rate of 0.52. Based on the ADRC analysis, all macro-regions also proved to diverge. However, the divergence rates were much lower. Based on the -convergence analysis, two groups of macro-regions were identified. The converging macro-regions were NAFTA, ASEAN, China and EU. The rate of convergence was extremely low for NAFTA and somewhat higher for China (1.32%) and ASEAN (1.4%) and particularly high in the EU (3.5%). There were two diverging macro-regions, MERCOSUR and CIS. The speed of divergence was 1% per year in both cases. Finally, based on the -convergence analysis, two macro-regions converged - the EU and ASEAN. The annual rate of convergence was moderate, namely 1.32 and 1.9% for EU and ASEAN respectively. Slow divergence trends were registered for China, MERCOSUR, and especially in NAFTA (0.14%), whereas the divergence trend for CIS was a bit higher at 1.25%.

The results of the study did not confirm the hypothesis that the global macro-regions were converging in terms of GDP per capita.