Assessing the drivers of economic convergence: Comparative impact of investment, human capital, and social infrastructure

Significant differences in GDP per capita across countries raise questions about whether poorer economies are catching up with richer ones and what factors drive the speed of convergence. This thesis examines economic convergence across 78 countries from 2000 to 2018, focusing on the influence of social infrastructure on the speed of convergence relative to investment and human capital. To capture the role of social infrastructure, a new index is constructed from 15 indicators of education, health, housing, and gender equality. The analysis shows three main results. First, countries converge in GDP per capita, but at a slower pace than predicted by neoclassical economic models, suggesting more substantial barriers to convergence. Second, education, as measured by school life expectancy, appears to be the main channel linking social infrastructure and growth. This suggests that the investment importance observed in previous research may actually reflect the role of educational expansion. Third, the drivers of convergence differ across economies. In small open economies, investment is a more critical factor, while social infrastructure plays a limited role. A regional analysis of small open economies in the Middle East and North Africa reveals persistent divergence despite similar initial conditions, pointing to structural constraints that limit growth in some countries. These findings highlight that convergence is not uniform, shedding new light on previously unexplored drivers.

Funder

Ministry of Finance, Saudi Arabia

Publisher

University of Galway

Rights

CC BY-NC-ND

cbn

Collections

University of Galway Theses (PhD Theses)