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Are Energy Endowed Countries Responsible for Conditional Convergence?

Abstract:
We test for economic convergence in GDP per capita and consumption per capita within two distinct sets of countries: those with significant (and plausibly exogenous) fossil fuel (FF) endowments and those without such endowments. Among countries with FF endowments, we find evidence of both absolute and conditional convergence across both macroeconomic dimensions, as indicated by standard β- and σ-convergence tests. By contrast, we do not find robust evidence of convergence among countries without FF endowments. This pattern—convergence among FF-endowed and non-convergence among non-endowed countries—is robust to changes in the sample period, controlling for potential resource curse effects, and is largely consistent across growth components. We discuss the implications for economic development and comment on its implications for global decarbonization policies.

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Keywords: Economic convergence, Fossil fuel endowments, Resource curse, Economic growth

DOI: 10.5547/01956574.43.3.moli

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Published in Volume 43, Number 3 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

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