Quantitative Tests for Income Level Convergence in Asian Countries

Asian countries have been striving for economic integration for decades. This effort may lead to the convergence of income level through externalities across countries. This paper investigates whether the convergence phenomenon holds for income levels in Asian countries for the periods between 1975-2015 applying the traditional methodology of σ- and β- convergence. Although the absolute β-convergence of income levels in Asian and ASEAN+3 countries do hold, σ-convergence and conditional β-convergence of income level generally do not exist. This suggests that the benefits of economic integration in Asian countries were not yet realized to be significant. A plausible explanation is that the economies of Asian countries are largely based on low trade openness and a high level of informal economy.