Figure 4.4 Convergence club memberships

216 C H A P T E R 4 G L O B A L P R O D U C T I V I T Y

FIGURE 4.4 Convergence club memberships

During 1970-2018, there were five clubs of countries with declining productivity differentials. Sixteen EMDEs have transitioned to the highest-productivity convergence club since the 2000s, and 22 have transitioned to the second highest.

A. Convergence clubs, 1970-2018 and transitions relative to the early-sample estimation of convergence clubs (1970-2000)

Club 1

Australia; Austria; Belgium; Canada; Cyprus; Denmark; Finland; France; Germany; Hong Kong SAR, China; Iceland; Ireland; Israel; Italy; Japan; Luxembourg; Malta; Netherlands; Norway; Republic of Korea; Singapore; Spain; Sweden; Switzerland; United States; United Kingdom

Greece; New Zealand; Portugal Albania; Bulgaria; Chile; China; Hungary; India; Iraq; Malaysia; Myanmar; Panama; Poland; Romania; Sri Lanka; Thailand; Turkey; Vietnam

Club 2

Algeria; Argentina; Brazil; Costa Rica; Islamic Republic of Iran; Mexico; South Africa; St. Lucia; Uruguay

Angola; Bangladesh; Burkina Faso; Cambodia; Colombia; Dominican Republic; Ecuador; Arab Republic of Egypt; Georgia; Ghana; Indonesia; Jamaica; Jordan; Morocco; Mozambique; Nigeria; Peru; Philippines; Sudan; Tunisia; Uganda; Zambia

Club 3

Bolivia; Côte d'Ivoire; Ethiopia; Guatemala; Honduras; Mali; Pakistan; Paraguay; Senegal; Tajikistan; Tanzania; Ukraine

Club 4

Cameroon; Kenya; Kyrgyz Republic; Malawi

Club 5

Democratic Republic of Congo; Haiti; Madagascar; Niger; Zimbabwe

Source: World Bank. Note: Based on convergence clubs estimated as in Phillips and Sul (2009). EMDEs = emerging market and developing economies. A. The figures show the club composition when estimated over the whole sample (1970-2018). The red dotted boxes show economies that were in a lower convergence club in the first half of the sample 1970-2000 (for example, moved from Club 2 to Club 1). Black text indicates advanced economies, and blue text are EMDEs.

Results. Since 1970, countries have fallen into five distinct convergence clubs in which productivity moved along a similar trajectory and productivity differentials were decreasing over time. Several countries have moved into faster-productivity clubs since 2000 (figure 4.4).

• Clusters during 1970-2018. The first club (Club 1) consists of economies converging toward the highest-productivity level. It includes all advanced economies, several upper-middle-income EMDEs that have sustained long periods of robust growth, and three low-income or lower-middle-income economies with rapid productivity growth (figure 4.5, panel A). This club initially had a broad range of productivity levels in 1970, which had narrowed by 2010 as low-productivity economies caught up. The second club includes the majority of upper-middle-income, or near uppermiddle-income EMDEs, converging toward an intermediate level of productivity. Lower clubs consist primarily of lower-middle- and low-income economies that have persisted in a low-productivity low-growth state (figure 4.5). Advanced economy members of the high-productivity Club 1 have achieved average productivity growth of about 2 percent since 1970, rising to 3 percent for EMDE Club 1 members—