Income Convergence of Central Asian Turkic Republics: A Panel Study for Beta and Sigma Convergences for Six Asian Economies

Abstract

The purpose of this study is to apply empirically the regional income convergence for a set of six Turkic Republics of the former Soviet Union, viz. Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. These countries ranked among the least developed centrally planned economies, and there are significant inter-country differences. For example, Kazakhstan and Azerbaijan, being oil and gas producers, had a significant growth during the last decade, but they are also transition economies in the midst of transforming their economies after decades of centrally controlled economic planning under the Soviet system. The research question analysed here is whether these Turkic Asian economies share a significant convergence experience since independence from the Soviet Union. Two kinds of convergence in these six transition economics are examined: beta convergence of incomes and sigma convergence of institutional convergence. The results demonstrate empirical evidence of beta income convergence, especially in the resource-rich republics of Kazakhstan, Azerbaijan and Turkmenistan, while the sigma convergence is uniformly lacking suggesting institutional divergence. Accordingly, beta convergence of incomes is rather superficial as it is not supported by evidence of institutional and policy efficiency captured by sigma convergence.