Testing for Convergence in Competitiveness and Growth in Selected Economies from 1994 to 2020
Marinko Skare, Małgorzata Porada-Rochon, Sasa Stjepanovic
Keywords:
competitiveness, convergence, club clustering, non-linear time-varying factor model, economic growth
Abstract:
Competitiveness on a small and large scale is necessary for growth. A definitive link between the
level of competitiveness and growth has been difficult to prove. One of the primary objectives
of economic planning is to promote price and exchange rate stability. Entrepreneurialism and
productivity also increase the country’s export competitiveness. The aim of this study is to test
for the convergence in competitiveness and convergence club existence in selected economies.
No previous research had tested for convergence in competitiveness using a nonlinear timevarying
factor model. This paper provides an overview on convergence in competitiveness and
convergence clubs’ existence for 42 countries using quarterly data from 1994q1 to 2020q4 testing
on competitiveness. Convergence log (t) test results show differences in competitiveness between
classified convergence clubs. Russia, Brazil, and Turkey are the clubs (groups of countries) that
show a transitional path (convergence in competitiveness) that differs entirely from the rest of
the sample. Countries with more natural resources and exogenous monetary policies follow a
unique development path to competitiveness. We find no evidence of divergence in countries
within the clubs. However, we find a club (group of countries) following a clear divergence path
from the other countries (Russia, Brazil, and Turkey). Our findings could potentially explain
the increase in divergence in competitiveness across countries after the financial crisis of 2008.
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 Testing for Convergence in Competitiveness and Growth in Selected Economies from 1994 to 2020 [PDF file] [Filesize: 1.39 MB]
 10.7441/joc.2021.03.09
Skare, M., Porada-Rochon, M., & Stjepanovic, S. (2021). Testing for Convergence in Competitiveness
and Growth in Selected Economies from 1994 to 2020. Journal of Competitiveness, 13(3), 147–164. https://doi.org/10.7441/joc.2021.03.09
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