Abstract
The economic history literature on income convergence between and across countries (particularly in those of the west) acknowledges the existence of two distinct chronological periods after the Second World War (WWII): 1950–1973 is seen as being the “golden age” in which both income convergence and distributional convergence took place. By contrast, the “post-golden age” period is characterized by distributional divergence and polarization, with, on average, the rich countries getting richer, and with far less mobility across income groups within the different countries, than in the previous period. When appraising convergence at the intracountry level, the “post-golden age” period also corresponds to a period during which social movements have flourished, particularly in the case of Europe. This chapter builds on previous analyses by studying convergence (or divergence) in the long term and in the case of a number of selected Asian countries compared with the case of the European Union. In doing so, it goes beyond the traditional concept of economic convergence by including sociological indicators such as life expectancy. Consequently, this chapter analyzes socioeconomic convergence during a period which starts with decolonization and which spans beyond the Asian crisis (1997–1998), the latter being considered as a structural break in terms of Asian growth. New trends delineated in the background of the current crisis will also be analyzed.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
The 27 (+ Vietnam North and South) participating countries in the Bandung Conference are referred to here as the “Bandung countries.”
- 2.
Other indices have been devised, such as the Genuine Progress Index, or Index of economic well-being (for more on this, see Osberg and Sharp 2002).
- 3.
See Appendix 2.1 for a list of countries encompassed in each group.
- 4.
Structural change typically manifests itself by the movement from the mineral and agricultural sectors to the manufacturing and services sectors.
- 5.
The explanations for the dismal socioeconomic performance in Africa (and particularly for slow growth) can be grouped into four different categories: country-specific characteristics, degree of openness (defined by the exports + imports to GDP ratio), lack of capital, and others causes.
- 6.
As is shown in the sociology and political science literature on the issue, there is a strong link between inequality on the one hand and violence on the other. According to this literature, poverty, rather than inequality per se, seems to impact more on social cohesion. On the issue of social capital and inequality, the interested reader can refer to Putnam (2000).
- 7.
The World Bank acknowledges the fact that previous data had underestimated the cost of living in most developing countries. Poverty lines used by the World Bank also refer to $10 a day in the case of poverty in a wealthy country, such as the United States.
- 8.
This definition holds for the household as the reference unit of analysis, by taking into account its composition; therefore, the data are “equivalized.”
- 9.
These figures are from the EU Statistics on Income and Living Conditions (EU-SILC) for 2007.
- 10.
Note that the USA has the largest gap between rich and poor compared to all other industrialized nations, with this gap being the widest in 70 years.
- 11.
The Gini coefficient is the most well-known measure of (income) dispersion. Based on the Lorenz Curve which relates the percentage of total income earned to the percentage of a given population, cumulated from the poorest to the richest, it is calculated as the area lying between the line of perfect equality (diagonal) and the Lorenz curve: the higher the coefficient, the higher the level of inequality.
- 12.
These figures are from the Eurostat New Cronos database; Eurostat, online database and Eurostat/EU-SILC. July 2010.
- 13.
Note that some countries, such as Ireland, appear quite favorably under this criterion. This is due to the downward revision (more than 15 %) of the “at risk of poverty” threshold in purchasing power parity terms in these countries since 2008. Some of this downward revision can be explained by low inflation rates and by deflationary tendencies since the beginning of the crisis (−1.6 % in 2010 in Ireland).
- 14.
The Theil entropy index borrows from information theory and measures nonrandomness or inequality. Its main advantage is that it can be decomposed into several groups of individuals, and that it allows therefore to measure within-groups as well between-groups inequality.
- 15.
As a proxy for children’s rights, we use 1 minus the proportion of children aged 10–14 in the labor force.
- 16.
Sigma convergence simply refers to the coefficient of variation (CV), which is simply equal to σ/μ. In its most standard form, it is measured as the unweighted coefficient of variation of per capita income. Beta convergence is obtained by regressing the growth rate of per capita incomes against its initial levels (see, e.g., Barro and Sala-i-Martin 1992; Ben-David 1994). A negative relationship between initial GDP per capita and growth rates denotes convergence.
- 17.
Note that because of the lack of data, Ethiopia and Libya are not included in the calculations.
References
Anand, S., & Sen, A. (1999). The income component of the HDI: Alternative formulations (UNDP Occasional Papers). New York: United Nations Development Bank.
Barro, R., & Sala-i-Martin, X. (1992). Convergence. Journal of Political Economy, 100(2), 223–251.
Ben-David, D. (1994). Income disparity among countries and the effects of freer trade. In L. Pasinetti & R. Solow (Eds.), Economic growth and the structure of long-term development. Basingstoke: Macmillan.
Callan, T., Nolan, B., Keane, C., & Walsh, J. (2010). Inequality and the crisis: The distributional impact of tax increases and welfare and public sector pay cuts. The Economic and Social Review, 41(4), 461–471.
Cappelen, A., Castellacci, F., Fagerberg, J., & Verspagen, B. (2003). The impact of EU regional support on growth and convergence in the European Union. Journal of Common Market Studies, 41(4), 621–644.
Caritas. (2010). 2010 survey. Madrid: FOESSA Social Studies Foundation.
De Walque, D., Kazianga, H., Over, M., & Vaillant, J. (2011, January). Food crisis, household welfare and HIV/AIDS treatment: Evidence from Mozambique (Policy Research Working Paper No. 5522). The World Bank Development Economics Development Research Group Workshop. http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2011/01/05/000158349_20110105143534/Rendered/PDF/WPS5522.pdf. Last accessed on 10 June 2011.
Epstein, P., Howlett, P., & Schulze, M.-S. (2003). Distribution dynamics: Stratification, polarization and convergence among OECD economies, 1870–1992. Explorations in Economic History, 40(1), 78–93.
Epstein, P., Howlett, P., & Schulze, M.-S. (2007). Trade, convergence, and globalisation: The dynamics of the international income distribution, 1950–1998. Explorations in Economic History, 44(1), 100–113.
Fagerberg, J., & Verspagen, B. (1996). Heading for divergence? Regional growth in Europe reconsidered. Journal of Common Market Studies, 34(3), 431–448.
Hsiao, F. S. T., & Hsiao, M.-C. (2004). Catching-up and convergence: Long-run growth in East Asia. Review of Development Economics, 8(2), 223–236.
IBRD and World Bank. (2010). Global monitoring report 2010: The MDGs after the crisis. Washington, DC: World Bank.
INSEE. (2010). Les revenus et le patrimoine des ménages, Édition 2010. Paris: Institut National de la Statistique et des Études Économiques.
Karras, G. (2009). Economic growth convergence in Asia, 1970–2003: Empirical evidence from the Solow model. The IUP Journal of Monetary Economics, VII(3–4), 73–84.
Kuznets, S. (1955). Economic growth and income inequality. American Economic Review, 45(1), 1–28.
la Fuente, D., & Vives, X. (1995). Infrastructure and education as instruments of regional policy: Evidence from Spain. Economic Policy, 10(20), 11–54.
Maddison, A. (2001). The world economy: A millennial perspective. Paris: OECD Development Centre Studies.
Neven, D., & Gouyette, C. (1995). Regional convergence in the European community. Journal of Common Market Studies, 33(1), 47–65.
Osberg, L., & Sharp, A. (2002). An index of economic well-being for selected OECD countries. Review of Income and Wealth, 48(3), 291–316.
Park, D. (2003). An empirical examination of income convergence in the Asia-Pacific region. Journal of Asian Economics, 14(3), 497–502.
Perroux, F. (1983). A new concept of development. London: Croom Helm.
Putnam, R. (2000). Bowling alone: The collapse and revival of American community. New York: Simon & Schuster.
Quah, D. (1996). Twin peaks: Growth and convergence in models of distribution dynamics. The Economic Journal, 106(437), 1045–1055.
ul Haq, M. (1995). Reflections on human development. Oxford: Oxford University Press.
Wilkinson, R., & Pickett, K. (2009). The spirit level: Why more equal societies almost always do better. London: Penguin.
Wodon, Q., & Yitzhaki, S. (2003). Growth and convergence: A social welfare framework. Review of Income and Wealth, 51(3), 443–454.
World Bank. (2008). World development indicators, poverty data, a supplement to the WDI 2008. Washington, DC: The World Bank.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2013 Springer Science+Business Media Dordrecht.
About this chapter
Cite this chapter
Andreosso-O’Callaghan, B. (2013). Economic Change and Social Dynamics: Converging and Diverging Trends Across Different Economies. In: Andreosso-O'Callaghan, B., Royall, F. (eds) Economic and Political Change in Asia and Europe. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-4653-4_2
Download citation
DOI: https://doi.org/10.1007/978-94-007-4653-4_2
Published:
Publisher Name: Springer, Dordrecht
Print ISBN: 978-94-007-4652-7
Online ISBN: 978-94-007-4653-4
eBook Packages: Humanities, Social Sciences and LawSocial Sciences (R0)