Productivity Convergence and Asian Trade Blocks

Abstract

The present chapter tries to examine the trend of productivity growth and the process of convergence of productivity among the countries within three blocks viz., ASEAN, APEC and SAARC, using the data compiled by R. Summers and A. Heston in Penn World Table -Mark 5.6 and 7.1. Applying Galton model of the growth process it indicates that the countries within ASEAN and SAARC block do not show any convergence of productivity during the period 1960 to 2010. However, the countries within APEC show the sign of convergence of productivity. Standard tests for convergence show that only the APEC group of countries satisfies the test of absolute convergence that is significant whereas ASEAN and SAARC fail to satisfy the test of absolute convergence. The application of the test of conditional convergence on the ASEAN group of countries does not satisfy the criteria of convergence conditioned by the volume of investment but it shows strong tendency of conditional convergence of productivity among the countries of SAARC trade block.