Income convergence with the developed world: sub-Saharan African countries v Central and Eastern European countries

Abstract

Abstract Our paper assesses income convergence of 46 sub-Saharan African (SSA) countries and 10 Central and Eastern European (CEE-10) countries with the USA. We apply multidimensional approaches comprising beta, sigma and convergence clubs. The beta convergence approach examines both absolute and conditional convergence, combining regression models with system Generalized Method of Moments (GMM) models while we employ log t regression tests for the identification of convergence clubs. The results indicate absolute beta and sigma convergence between the CEE-10 countries and the USA, whereas no such convergence is found for SSA countries. Additionally, the findings reveal conditional convergence with the USA, occurring at annual speeds of 7% for the CEE-10 and 2.05% for the SSA countries, with respective half-life processes of 10 and 33 years. Finally, the log- t regression results suggest four convergence clubs within the European Union and five within SSA countries indicating differences in intra-club and inter-club steady state paths.