Geoscience Reference
In-Depth Information
Fig. 9.2
Increasing Intra-Asian exports
Armstrong
1995
).
4
While economic factors are important, it is political integration
that appears to drive convergence. Institutional forces outweigh market forces in
drawing national economies closer together (Beckfield
2009
). Economic arguments
show freer trade and factor mobility from integration allow less-developed
members to grow faster than more-developed ones. Factor price equalization
further supports the convergence hypothesis (Stolper and Samuelson
1941
). In a
two-country resource-rich/resource-poor model, lowering tariffs has a negative
effect on real wages in the resource-rich country (most gains accrue to resource
rent), while the resource-poor country benefits through terms-of-trade. This also
supports the convergence hypothesis.
However, an institutionalist economic explanation emphasizes more the formal
structure and role actors play in integration initiatives. It suggests that as economic
actors follow common rules in a more integrated system, and markets increase in
size and complexity, convergence will likely result. It also stresses the importance
of politically established institutions. Thus, to analyze convergence, political
relations matter more than regional markets or economic development. Conver-
gence can come from the diffusion of common development policies and the
diffusion of common rules and market regulations.
4
Evidence from Cross-Sectional Analysis of the Regional Growth Process within the European
Union is shown in Armstrong (
1995
); and Ben-David (
2001
). Some, however, found a pattern of
divergence; see Slaughter (
2001
); Arestis and Paliginis (
1995
). Part of the explanation rests on the
interpretation of
-convergence is a decrease in GDP
dispersion, hence showing how the distribution of income evolves, and
σ
- and
β
-convergence (Martin
1996
), where
σ
β
-convergence points to a
negative relationship between growth and initial level of GDP.
