The Effect of the Convergence of Sustainable Competitiveness on the Convergence of per capita Income

Document Type : Research Paper

Authors

Department of Economics, Faculty of Economics and Social Science, University of Alzahra, Tehran, Iran.

Abstract

Economic growth is a crucial indicator of a country's development and plays a significant role in its integration into global economic exchanges and its bargaining power in international trade. This study investigates the effect of sustainable competitiveness convergence on per capita income convergence among the top 50 science-producing countries between 2014 and 2023, using the ordinary least squares (OLS) method. The findings reveal a positive and significant relationship between the convergence of natural capital, intellectual capital, resource efficiency, and social capital, and the convergence of per capita income. Governments have a dual responsibility: they must direct resources toward wealth generation while also converting non-renewable natural resources into renewable ones to achieve sustainable growth and development. Additionally, by fostering and motivating human capital, governments can enhance innovation and close the technology gap with leading countries in sustainable competitiveness. Two estimation cases were analyzed. The first case examined the interactive effect of governance on natural capital, while the second focused on the interactive impact of governance on intellectual capital. In both instances, these interactive effects were found to have a positive and significant influence on per capita income convergence. Given the critical importance of economic growth and per capita income, policymakers are encouraged to create a conducive environment for attracting intellectual capital into production activities by developing new markets for production factors. Moreover, it is expected that leaders will enhance the competitiveness index, particularly in terms of social capital, and facilitate economic growth by improving people’s livelihood security and well-being, promoting accountability and responsibility, and striving for equal opportunities.

Keywords

Main Subjects

Addi, H. M., &  Abubakar, A. B. (2024). Investment and Economic Growth: Do Institutions and Economic Freedom Matter? International Journal of Emerging Markets, 19(4), 825-845.

Afonso, A., & Furceri, D. (2020). Government Size, Composition, Volatility and Economic Growth. European Journal of Political Economy, 26(4), 507-532.

Aisen, A., & Veiga, F. J. (2013). How does Political Instability Affect Economic Growth? European Journal of Political Economy, 29, 150-167.

Aparicio, S., Urbano, D., & Audretsch, D. (2016). Institutional Factors, Opportunity Entrepreneurship and Economic Growth: Panel Data Evidence. Technological Forecasting and Social Change, 102, 45-61.

Bahrini, R., & Qaffas, A. A. (2019). Impact of Information and Communication Technology on Economic Growth: Evidence from Developing Countries. Economies, 7(1), 21-30.

Batrancea, L., Rathnaswamy, M. K., & Batrancea, I. (2022). A Panel Data Analysis on Determinants of Economic Growth in Seven Non-BCBS Countries. Journal of the Knowledge Economy, 13(2), 1650-1665.

Baumol, W. (1986). Productivity Growth, Convergence and Welfare: What the Long-Run Data Says. American Economic Review, 76, 1072-1085.

Bayarcelik, E. B., & Taşel, F. (2012). Research and Development: Source Of Economic Growth. Procedia-Social and Behavioral Sciences, 58, 744-753.

Belke, A., Dobnik, F., & Dreger, C. (2011). Energy Consumption and Economic Growth: New Insights into the Cointegration Relationship. Energy Economics, 33(5), 782-789.

Beran, I. M. (2015). System Dynamics Modelling and Simulating the Effects of Intellectual Capital on Economic Growth. Croatian Operational Research Review, 6(2), 445-457.

Bhargava, A., Jamison, D. T., Lau, L. J., & Murray, C. J. (2001). Modeling the Effects of Health on Economic Growth. Journal of Health Economics, 20(3), 423-440.

Bove, V., & Elia, L.(2017). Migration, Diversity, and Economic Growth. World Development, 89, 227-239.

Bozkurt, Ö. G., Erdem, C., & Eroğlu, İ. (2015). Identifying the Factors Affecting The Economic Growth Of Oil-Producing Countries. International Journal of Trade and Global Markets, 8(2), 97-111.

Cieślik, A., & Goczek, Ł. (2018). Control of Corruption, International Investment, and Economic Growth–Evidence from Panel Data. World Development, 103, 323-335.

d’Agostino, G., Dunne, J. P., & Pieroni, L. (2016). Government Spending, Corruption, and Economic Growth. World Development, 84, 190-205.

Fumagalli, E., Pintor, M. P., & Suhrcke, M. (2024). The Impact of Health on Economic Growth: A Narrative Literature Review. Health Policy, 105039.

Gerelmaa, L., & Kotani, K. (2016). Further Investigation of Natural Resources and Economic Growth: Do Natural Resources Depress Economic Growth? Resources Policy, 50, 312-321.

Guru, B. K., & Yadav, I. S. (2019). Financial Development and Economic Growth: Panel Evidence from BRICS. Journal of Economics, Finance and Administrative Science, 24(47), 113-126.

Jones, C. I. (2019). Paul Romer: Ideas, Nonrivalry, and Endogenous Growth. The Scandinavian Journal of Economics, 121(3), 859-883.‏

Khan, M. T. I., Anwar, S., Sarkodie, S. A., Yaseen, M. R., & Nadeem, A. M. (2023). Do Natural Disasters Affect Economic Growth? The Role of Human Capital, Foreign Direct Investment, and Infrastructure Dynamics. Heliyon, 9(1).

Kismawadi, E. R. (2023). Contribution of Islamic banks and Macroeconomic Variables to Economic Growth in Developing Countries: Vector Error Correction Model Approach (VECM). Journal of Islamic Accounting and Business Research, (ahead-of-print).

Li, X., & Liu, X. (2005). Foreign Direct Investment and Economic Growth: An Increasingly Endogenous Relationship. World Development, 33(3), 393-407.

Liangliang, Z., Jun, Y., & Hua, Z. (2017). The Impact of Social Capital on Economic Growth. Journal of Finance and Economics, 43(05), 31-43.

Meyer, D., &  Shera, A. (2017). The Impact of Remittances on Economic Growth: An Econometric Model. EconomiA, 18(2), 147-155.

Mo, P. H. (2001). Corruption and Economic Growth. Journal of Comparative Economics, 29(1), 66-79.

Mohamed, M. M. A., Liu, P., & Nie, G. (2022). Causality between Technological Innovation and Economic Growth: Evidence from the Economies of Developing Countries. Sustainability, 14(6), 3586.

Munyo, I., & Veiga, L. (2024).  Entrepreneurship and Economic Growth. Journal of the Knowledge Economy, 15(1), 319-336.  

Öncel, A., Saidmurodov, S., & Kutlar, A. (2024). Financial Development, Export and Economic Growth: Panel Data Evidence from Commonwealth of Independent States. The Journal of International Trade  Economic Development, 33(1), 29-56.

Ozili, P. K., Ademiju, A., & Rachid, S. (2023). Impact of Financial Inclusion on Economic Growth: Review of Existing Literature and Directions for Future Research. International Journal of Social Economics, 50(8), 1105-1122.

Pradhan, R. P., Arvin, M. B., Nair, M., Bennett, S. E., &  Bahmani, S. (2024). Some Determinants and Mechanics of Economic Growth in Middle-Income Countries: The Role of ICT Infrastructure Development, Taxation and Other Macroeconomic Variables. The Singapore Economic Review, 69(01), 297-333.

Rahman, P., Zhang, Z., & Musa, M. (2023). Do Technological Innovation, Foreign Investment, Trade and Human Capital Have a Symmetric Effect on Economic Growth? Novel Dynamic ARDL Simulation Study on Bangladesh. Economic Change and Restructuring, 56(2), 1327-1366.

Romer, P. M. (1990). Endogenous Technological Change. Journal of Political Economy, 98, 71-102.

Samarasinghe, T. (2018). Impact of Governance on Economic Growth. MPRA, 89834, Retrieved from https://mpra.B.uni-muenchen.de/id/eprint/89834.

Slaughter, M. J. (1997). Per Capita Income Convergence and the Role of International Trade.‏ NBER, w5897, Retrieved from https://www.nber.org/papers/w5897.

---------- (2001). Trade Liberalization and Per Capita Income Convergence: A Difference-in-Differences Analysis. Journal of International Economics, 55(1), 203-228.‏

Solow, R. M. (1956). A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics, 70, 65-94.

Stern, D. I. (2011). The Role of Energy in Economic Growth. Annals of the New York Academy of Sciences. 1219(1), 26-50.

Stern, D. I. (2019). Energy and Economic Growth (28-46). In the Routledge Handbook of Energy Economics. London: Routledge.

Tabash, M. I., Farooq, U., Safi, S. K., Shafiq, M. N., & Drachal, K. (2022). Nexus between Macroeconomic Factors and Economic Growth in Palestine: An Autoregressive Distributed Lag Approach. Economies, 10(6), 145-160.

Teixeira, A. A., & Queirós, A. S. (2016). Economic Growth, Human Capital and Structural Change: A Dynamic Panel Data Analysis. Research Policy, 45(8), 1636-1648.

Tiba, S., &  Omri, A. (2017). Literature Survey on the Relationships Between Energy, Environment and Economic Growth. Renewable and Sustainable Energy Review, 69, 1129-1146.

Tselios, V. (2009). Growth and Convergence in Income Per Capita and Income Inequality in the Regions of the EU. Spatial Economic Analysis, 4(3), 343–370.

Upreti, P. (2015). Factors Affecting Economic Growth in Developing Countries. Major Themes in Economics, 17, 37-54.

Urbano, D., Aparicio, S., & Audretsch, D. (2019). Twenty-five Years of Research on Institutions, Entrepreneurship, and Economic Growth: What has been learned? Small Business Economics, 53, 21-49.

Valickova, P., Havranek, T., & Horvath, R. (2015). Financial Development and Economic Growth: A Meta‐Analysis. Journal Of Economic Surveys, 29(3), 506-526.

Van Eyden, R., Difeto, M., Gupta, R., & Wohar, M. E. (2019). Oil Price Volatility And Economic Growth: Evidence From Advanced Economies Using More Than A Century’s Data. Applied Energy, 233, 612-621.

Whiteley, P. F. (2000). Economic Growth and Social Capital. Political Studies, 48(3), 443-466.

Xu, J., She, S., Gao, P., & Sun, Y. (2023). Role of Green Finance in Resource Efficiency and Green Economic Growth. Resources Policy, 81, 103349.

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Addi, H. M., &  Abubakar, A. B. (2024). Investment and Economic Growth: Do Institutions and Economic Freedom Matter? International Journal of Emerging Markets, 19(4), 825-845.
Afonso, A., & Furceri, D. (2020). Government Size, Composition, Volatility and Economic Growth. European Journal of Political Economy, 26(4), 507-532.
Aisen, A., & Veiga, F. J. (2013). How does Political Instability Affect Economic Growth? European Journal of Political Economy, 29, 150-167.
Aparicio, S., Urbano, D., & Audretsch, D. (2016). Institutional Factors, Opportunity Entrepreneurship and Economic Growth: Panel Data Evidence. Technological Forecasting and Social Change, 102, 45-61.
Bahrini, R., & Qaffas, A. A. (2019). Impact of Information and Communication Technology on Economic Growth: Evidence from Developing Countries. Economies, 7(1), 21-30.
Batrancea, L., Rathnaswamy, M. K., & Batrancea, I. (2022). A Panel Data Analysis on Determinants of Economic Growth in Seven Non-BCBS Countries. Journal of the Knowledge Economy, 13(2), 1650-1665.
Baumol, W. (1986). Productivity Growth, Convergence and Welfare: What the Long-Run Data Says. American Economic Review, 76, 1072-1085.
Bayarcelik, E. B., & Taşel, F. (2012). Research and Development: Source Of Economic Growth. Procedia-Social and Behavioral Sciences, 58, 744-753.
Belke, A., Dobnik, F., & Dreger, C. (2011). Energy Consumption and Economic Growth: New Insights into the Cointegration Relationship. Energy Economics, 33(5), 782-789.
Beran, I. M. (2015). System Dynamics Modelling and Simulating the Effects of Intellectual Capital on Economic Growth. Croatian Operational Research Review, 6(2), 445-457.
Bhargava, A., Jamison, D. T., Lau, L. J., & Murray, C. J. (2001). Modeling the Effects of Health on Economic Growth. Journal of Health Economics, 20(3), 423-440.
Bove, V., & Elia, L.(2017). Migration, Diversity, and Economic Growth. World Development, 89, 227-239.
Bozkurt, Ö. G., Erdem, C., & Eroğlu, İ. (2015). Identifying the Factors Affecting The Economic Growth Of Oil-Producing Countries. International Journal of Trade and Global Markets, 8(2), 97-111.
Cieślik, A., & Goczek, Ł. (2018). Control of Corruption, International Investment, and Economic Growth–Evidence from Panel Data. World Development, 103, 323-335.
d’Agostino, G., Dunne, J. P., & Pieroni, L. (2016). Government Spending, Corruption, and Economic Growth. World Development, 84, 190-205.
Fumagalli, E., Pintor, M. P., & Suhrcke, M. (2024). The Impact of Health on Economic Growth: A Narrative Literature Review. Health Policy, 105039.
Gerelmaa, L., & Kotani, K. (2016). Further Investigation of Natural Resources and Economic Growth: Do Natural Resources Depress Economic Growth? Resources Policy, 50, 312-321.
Guru, B. K., & Yadav, I. S. (2019). Financial Development and Economic Growth: Panel Evidence from BRICS. Journal of Economics, Finance and Administrative Science, 24(47), 113-126.
Jones, C. I. (2019). Paul Romer: Ideas, Nonrivalry, and Endogenous Growth. The Scandinavian Journal of Economics, 121(3), 859-883.‏
Khan, M. T. I., Anwar, S., Sarkodie, S. A., Yaseen, M. R., & Nadeem, A. M. (2023). Do Natural Disasters Affect Economic Growth? The Role of Human Capital, Foreign Direct Investment, and Infrastructure Dynamics. Heliyon, 9(1).
Kismawadi, E. R. (2023). Contribution of Islamic banks and Macroeconomic Variables to Economic Growth in Developing Countries: Vector Error Correction Model Approach (VECM). Journal of Islamic Accounting and Business Research, (ahead-of-print).
Li, X., & Liu, X. (2005). Foreign Direct Investment and Economic Growth: An Increasingly Endogenous Relationship. World Development, 33(3), 393-407.
Liangliang, Z., Jun, Y., & Hua, Z. (2017). The Impact of Social Capital on Economic Growth. Journal of Finance and Economics, 43(05), 31-43.
Meyer, D., &  Shera, A. (2017). The Impact of Remittances on Economic Growth: An Econometric Model. EconomiA, 18(2), 147-155.
Mo, P. H. (2001). Corruption and Economic Growth. Journal of Comparative Economics, 29(1), 66-79.
Mohamed, M. M. A., Liu, P., & Nie, G. (2022). Causality between Technological Innovation and Economic Growth: Evidence from the Economies of Developing Countries. Sustainability, 14(6), 3586.
Munyo, I., & Veiga, L. (2024).  Entrepreneurship and Economic Growth. Journal of the Knowledge Economy, 15(1), 319-336.  
Öncel, A., Saidmurodov, S., & Kutlar, A. (2024). Financial Development, Export and Economic Growth: Panel Data Evidence from Commonwealth of Independent States. The Journal of International Trade  Economic Development, 33(1), 29-56.
Ozili, P. K., Ademiju, A., & Rachid, S. (2023). Impact of Financial Inclusion on Economic Growth: Review of Existing Literature and Directions for Future Research. International Journal of Social Economics, 50(8), 1105-1122.
Pradhan, R. P., Arvin, M. B., Nair, M., Bennett, S. E., &  Bahmani, S. (2024). Some Determinants and Mechanics of Economic Growth in Middle-Income Countries: The Role of ICT Infrastructure Development, Taxation and Other Macroeconomic Variables. The Singapore Economic Review, 69(01), 297-333.
Rahman, P., Zhang, Z., & Musa, M. (2023). Do Technological Innovation, Foreign Investment, Trade and Human Capital Have a Symmetric Effect on Economic Growth? Novel Dynamic ARDL Simulation Study on Bangladesh. Economic Change and Restructuring, 56(2), 1327-1366.
Romer, P. M. (1990). Endogenous Technological Change. Journal of Political Economy, 98, 71-102.
Samarasinghe, T. (2018). Impact of Governance on Economic Growth. MPRA, 89834, Retrieved from https://mpra.B.uni-muenchen.de/id/eprint/89834.
Slaughter, M. J. (1997). Per Capita Income Convergence and the Role of International Trade.‏ NBER, w5897, Retrieved from https://www.nber.org/papers/w5897.
---------- (2001). Trade Liberalization and Per Capita Income Convergence: A Difference-in-Differences Analysis. Journal of International Economics, 55(1), 203-228.‏
Solow, R. M. (1956). A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics, 70, 65-94.
Stern, D. I. (2011). The Role of Energy in Economic Growth. Annals of the New York Academy of Sciences. 1219(1), 26-50.
Stern, D. I. (2019). Energy and Economic Growth (28-46). In the Routledge Handbook of Energy Economics. London: Routledge.
Tabash, M. I., Farooq, U., Safi, S. K., Shafiq, M. N., & Drachal, K. (2022). Nexus between Macroeconomic Factors and Economic Growth in Palestine: An Autoregressive Distributed Lag Approach. Economies, 10(6), 145-160.
Teixeira, A. A., & Queirós, A. S. (2016). Economic Growth, Human Capital and Structural Change: A Dynamic Panel Data Analysis. Research Policy, 45(8), 1636-1648.
Tiba, S., &  Omri, A. (2017). Literature Survey on the Relationships Between Energy, Environment and Economic Growth. Renewable and Sustainable Energy Review, 69, 1129-1146.
Tselios, V. (2009). Growth and Convergence in Income Per Capita and Income Inequality in the Regions of the EU. Spatial Economic Analysis, 4(3), 343–370.
Upreti, P. (2015). Factors Affecting Economic Growth in Developing Countries. Major Themes in Economics, 17, 37-54.
Urbano, D., Aparicio, S., & Audretsch, D. (2019). Twenty-five Years of Research on Institutions, Entrepreneurship, and Economic Growth: What has been learned? Small Business Economics, 53, 21-49.
Valickova, P., Havranek, T., & Horvath, R. (2015). Financial Development and Economic Growth: A Meta‐Analysis. Journal Of Economic Surveys, 29(3), 506-526.
Van Eyden, R., Difeto, M., Gupta, R., & Wohar, M. E. (2019). Oil Price Volatility And Economic Growth: Evidence From Advanced Economies Using More Than A Century’s Data. Applied Energy, 233, 612-621.
Whiteley, P. F. (2000). Economic Growth and Social Capital. Political Studies, 48(3), 443-466.
Xu, J., She, S., Gao, P., & Sun, Y. (2023). Role of Green Finance in Resource Efficiency and Green Economic Growth. Resources Policy, 81, 103349.

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History

  • Receive Date: 24 November 2024
  • Revise Date: 28 March 2025
  • Accept Date: 04 May 2025

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