Macroeconomic convergence, development and growth Essay

macrostinting convergence, development and growth - Essay ExampleThis paper offers a comprehensive analysis of the concept of macroeconomic convergence, and outlines empirical facts, that confirm this hypothesis. Macroeconomic convergence is a process adopted by the adjoining economies crossways regions for economic integration amidst themselves. The trade and growth lays argon two models depicting economic integration and argon related to convergence of income. Macroeconomic convergence could be reached more rapidly when there is an equitable scattering of wealth .Some of the most vigorous of all attempts towards macroeconomic convergence is noted among the African economies which atomic number 18 pestered by poverty. These nations have realized the importance of macroeconomic convergence to make their meek presences felt up and to ensure monetary, financial and political stability as well as securityThere are two kinds of macroeconomic convergence. Sigma-convergence signifies the rate at which the disparity in the income levels of nations is reducing, beta-convergence implies the rate at which the poorer nations are ontogeny compared to their richer counterpartsMacroeconomic convergence could be brought about by drawing integration between the macroeconomic policies of the be nations. The nations might take an initiative to characterize themselves with similar economic features so as to lend themselves on comparative grounds with their neighboursThe concept of convergence is found to be popular among the poorer nations of the world whose primary develop is to raise their respective per capita incomes. Economic growth and macroeconomic convergence an empirical investigation Integration of national as well as regional economies with world economy is the salient feature over some(prenominal) years. Two models of economic integration which relates to income convergence are firstly growth models and secondly trade models (Kim, 1997, p.4). fit to the neo classical Solow model of growth, the regional level of income varies due to the different capital labour ratios. Whereas the Hecksher Ohlin trade model says that the income varies across the regions due to the difference in the factor prices and factor endowments (Kim, 1997, p.5). Income convergence occurs due to trades in goods and economic integration via equalisation in prices. Factor endowments vary across the regions and therefore various regions specialise in different industries. The growth models generated by Romer and Lucas, which are based on increasing returns on physical capital, states the chances of such(prenominal) income divergence. Even the trade models by Krugman states that income divergence may arise due to the differences in the industrial structures. If the industries weaponed with high technology and high wages are subjected to external economy then the trade proceeding