VERIFYING OF BETA CONVERGENCE FOR SOUTH EAST COUNTRIES OF ASIA

Abstract

Convergence means the process of balancing disparities in chosen indicators of homogeneous economic groups. β-convergence is based on the assumption in which less developed economy grows faster than the advanced ones, resulting in higher speed of GDP per capita in less developed economy. In this article, β convergence is verified based on dependency between the growth of real GDP per capita and the initial level of real GDP per capita (in PPP) and based on the modifications of this relationship using Least Squares Method for 9 countries in South East Asia with different samples from 2000 to 2015. To completely explain the dependency and calculation of consistent, minimal estimators of dummies are used and a structural parameter is created, to eliminate shocks and possible disparities between chosen countries. According to the results, convergence was proved only in the sample since 2004 until 2008 among the nine chosen countries of South East Asia.