Testing Convergence in Post-War Transition Country

摘要

The issue of economic convergence has been widely analyzed by the researchers. Convergence hypothesis has been tested at different levels - global, national, regional and local. This paper is analyzing local economic convergence in Bosnia and Herzegovina (BiH) in last three decades. In this period the country was facing twofold transition: from war to peace and from socialism to market economy. The regression and distributional approach to convergence analysis are combined. The first hypothesis research is testing is that poor municipalities grow faster comparing to rich municipalities - unconditional beta convergence. Second hypothesis is that dispersion of local per capita GDP decreases over time - sigma convergence. To further investigate the issue and check the changes in the distribution, several visual inspection instruments were also used. The research findings are inconclusive. While regression analysis provides some evidence for unconditional beta-convergence, in a case of sigma convergence, results are mixed. This is related to significant structural changes country went through, firmly confirmed with the transitional probability matrix data. Findings confirm the necessity for combining different approaches and instruments while analysing convergence. From the specific country perspective, research results can be used as a strong argument for the necessity of new more balanced regional development policy.