Economic and Sectoral Convergence in Latin America and the Caribbean: An Analysis of Beta, Sigma, and Gamma Convergence

Abstract

The purpose of this study is to examine the economic and sectoral convergence of 32 countries in Latin America and the Caribbean (LAC) region from 1980 to 2022. The economic convergence hypothesis suggests that two economies with similar structural characteristics but different per capita income levels can tend to equalize in terms of income level in the long run. Confirming economic convergence has led to the development of various methodologies, among which dynamic and static disparity measures stand out. To achieve the objective of this research, both types of measures were calculated, determining beta and sigma convergence for dynamic disparity and gamma convergence for static disparity. This was accomplished by adopting the methodological approaches proposed by Sala-I-Martin and Marchante, Ortega, and Sánchez. The results show a gradual but steady evolution towards economic and sectoral convergence in LAC region during the 1980–2022 period. However, inequalities and divergences persist, requiring less developed countries to strengthen their institutions, implement sound macroeconomic policies, and diversify their economies. These measures are essential to driving economic growth and fostering more balanced and sustainable development across the region.